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SUBORDINATED CREDIT AGREEMENT
DATED AS OF OCTOBER 31, 1996
BETWEEN
XXXXXXXXX SIGN COMPANY
AND
BANK OF AMERICA ILLINOIS
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Interpretive Provisions . . . . . . . . . . . . . . . . . . . 12
1.3 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE II
THE CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1 Amount and Terms of Commitment. . . . . . . . . . . . . . . . . . . 13
2.2 Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . 14
2.4 Conversion and Continuation Elections . . . . . . . . . . . . . . . 14
2.5 Optional Prepayments. . . . . . . . . . . . . . . . . . . . . . . . 15
2.6 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.7 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.8 Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.9 Computation of Fees and Interest. . . . . . . . . . . . . . . . . . 15
2.10 Payments by the Company . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . . . . . . . . . 16
3.1 Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.3 Increased Costs and Reduction of Return . . . . . . . . . . . . . . 17
3.4 Funding Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.5 Inability to Determine Rates. . . . . . . . . . . . . . . . . . . . 17
3.6 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1 Delivery of Documents . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Conditions to All Loans . . . . . . . . . . . . . . . . . . . . . . 19
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ARTICLE V
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . 20
5.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . 20
5.2 Corporate Authorization; No Contravention . . . . . . . . . . . . . 20
5.3 Governmental Authorization. . . . . . . . . . . . . . . . . . . . . 20
5.4 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.6 No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.7 ERISA Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.8 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . 22
5.9 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . 22
5.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.11 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . 22
5.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . 23
5.13 Regulated Entities. . . . . . . . . . . . . . . . . . . . . . . . . 23
5.14 No Burdensome Restrictions. . . . . . . . . . . . . . . . . . . . . 23
5.15 Copyrights, Patents, Trademarks and Licenses, etc.. . . . . . . . . 23
5.16 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VI
AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . 24
6.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4 Preservation of Corporate Existence, Etc. . . . . . . . . . . . . . 25
6.5 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . 26
6.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7 Payment of Obligations. . . . . . . . . . . . . . . . . . . . . . . 26
6.8 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . 26
6.9 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . 26
6.10 Inspection of Property and Books and Records. . . . . . . . . . . . 26
6.11 Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . . 27
6.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.1 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . 27
7.2 Property Transfer, Merger or Lease-Back . . . . . . . . . . . . . . 28
7.3 Acquire Securities. . . . . . . . . . . . . . . . . . . . . . . . . 28
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7.4 Limitation on Indebtedness. . . . . . . . . . . . . . . . . . . . . 29
7.5 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . 29
7.6 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.7 Contingent Obligations. . . . . . . . . . . . . . . . . . . . . . . 29
7.8 Joint Ventures. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.9 Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.10 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . 30
7.11 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.12 Change in Business. . . . . . . . . . . . . . . . . . . . . . . . . 30
7.13 Accounting Changes. . . . . . . . . . . . . . . . . . . . . . . . . 30
7.15 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . 30
7.16 Offering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VIII
EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.1 Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.3 Rights Not Exclusive. . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE IX
SUBORDINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.1 Agreement to Subordinate. . . . . . . . . . . . . . . . . . . . . . 34
9.2 Liquidation; Dissolution; Bankruptcy. . . . . . . . . . . . . . . . 34
9.3 Default on Senior Debt. . . . . . . . . . . . . . . . . . . . . . . 35
9.4 Notice of Acceleration of Obligations . . . . . . . . . . . . . . . 36
9.5 When Distribution Must Be Paid Over . . . . . . . . . . . . . . . . 36
9.6 Notice by Company . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.7 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.8 Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.9 Subordination May Not Be Impaired by Company. . . . . . . . . . . . 37
9.10 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.11 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE X
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . 38
10.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . 39
10.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 39
10.5 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 39
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10.6 Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . 39
10.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 40
10.8 Assignments, Participations, etc.. . . . . . . . . . . . . . . . . 40
10.9 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.10 Set-off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.11 Automatic Debits of Fees . . . . . . . . . . . . . . . . . . . . . 41
10.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.14 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . . 42
10.15 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.16 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 42
Exhibits:
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Opinion of Guarantor's Counsel
Exhibit E Form of Guarantee and Contingent Purchase
Agreement of ICC
Exhibit F Form of the ICC Credit Agreement
Schedules:
Schedule 5.16 Minority Interests
Schedule 7.1 Permitted Liens
Schedule 7.5 Permitted Indebtedness
Schedule 7.8 Contingent Obligations
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SUBORDINATED CREDIT AGREEMENT
This SUBORDINATED CREDIT AGREEMENT is entered into as of October 31, 1996
(the "Agreement") between Xxxxxxxxx Sign Company, a Texas corporation (the
"COMPANY"), and Bank of America Illinois (the "BANK").
WHEREAS, the Bank has agreed to make available to the Company a credit
facility upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. The following terms have the following
meanings:
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
the other Person, whether through the ownership of voting securities,
membership interests, by contract, or otherwise.
"AGREEMENT" means this Credit Agreement.
"APPLICABLE MARGIN" means: (i) with respect to Base Rate Loans,
0.50%; and (ii) with respect to Offshore Rate Loans, 1.6875%.
"ATTORNEY COSTS" means and includes all fees reasonable and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all disbursements of internal
counsel.
"BASE RATE" means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate, which means, for any day, the rate set
forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, "H.15(519)") on the preceding Business Day
opposite the caption "Federal Funds (Effective)"; or, if for any relevant
day such rate is not so published on any such preceding Business Day, the
rate for such day will be the arithmetic mean as determined by the Bank of
the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each of three
leading brokers of Federal funds transactions in New York City selected by
the Bank; and (b) the rate of interest in effect for such day as publicly
announced from time to time by BofA in San Francisco, California, as its
"reference rate." (The "reference rate" is a rate set by BofA based upon
various factors including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing
some loans, which may be priced at, above, or below such announced rate.)
Any change in the reference rate announced by BofA shall take effect at the
opening of business on the day specified in the public announcement of such
change.
"BASE RATE LOAN" means a Loan that bears interest based on the Base
Rate.
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"BOFA" means Bank of America National Trust and Savings Association, a
national banking association.
"BORROWING DATE" means any date on which the Loan is made to the
Company under Section 2.3.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in Chicago are authorized or required by law
to close and, if the applicable Business Day relates to any Offshore Rate
Loan, means such a day on which dealings are carried on in the applicable
offshore dollar interbank market.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"CASH FLOW" means, as of any date of determination and as determined
in accordance with GAAP, the sum of (i) the consolidated net income of the
Company for the preceding four calendar quarters, PLUS (ii) the
consolidated depreciation, amortization and deferred taxes of the Company
for such period, PLUS (iii) the following one-time expenses (net of
Federal, state and local income taxes) relating to the Reorganization: (A)
the fulfillment of net contractual commitments to senior officers of the
Company, (B) a refinancing fee to Xxxxx X. Xxxxxxxx, and (C) attorney and
accountant fees (collectively, "(A)" through "(C)" preceding are referred
to herein as the "One Time Expenses").
"CASH FLOW COVERAGE RATIO" means, as of any date of determination, the
Company's Cash Flow for the previous four calendar quarters divided by
scheduled principal payments made on the Senior Debt for the same period.
"CLOSING DATE" means the date on which all conditions precedent set
forth in Section 4.1 are satisfied or waived by the Bank.
"CODE" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of EXHIBIT C.
"CONTINGENT OBLIGATION" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation (the "primary obligations") of another
Person (the "primary obligor"), including any obligation of that Person (i)
to purchase, repurchase or otherwise acquire such primary obligations or
any security therefor, (ii) to advance or provide funds for the payment or
discharge of any such primary obligation, or to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net
worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless the
holder of any such primary obligation against loss in respect thereof
(each, a "GUARANTY OBLIGATION"); (b) with respect to any Surety Instrument
issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase
any materials, supplies or other property from, or to obtain the services
of, another Person if the relevant contract or other related document or
obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered, or (d) in
respect of any Swap Contract.
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"CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound.
"CONVERSION/CONTINUATION DATE" means any date on which, under Section
2.4, the Company (a) converts a Loan of one Type to a Loan of another Type,
or (b) continues as a Loan of the same Type, but with a new Interest
Period, a Loan having an Interest Period expiring on such date.
"DEBT" means, as of any applicable date of determination, all items of
indebtedness, obligation or liability of a Person, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, that should be classified as balance sheet
liabilities in accordance with GAAP.
"DEFAULT" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"DEFERRED DIVIDEND PAYABLE TO MANAGEMENT" means the deferred portion
of the Special Dividend declared by the Company and to be paid to certain
members of management as a part of the Reorganization.
"DOLLARS", "DOLLARS" and "$" each mean lawful money of the United
States.
"EBITDA" means, as of any applicable date of determination and as
determined in accordance with GAAP, net income (plus for any period in
which the One Time Expenses were paid, the One Time Expenses) for the
previous four calendar quarters, plus (i) interest expense, tax expense,
depreciation and amortization expenses for the same period, plus (ii) any
loss for the same period and excluding (iii) any gain or loss for the same
period arising from the sale of capital assets other than from sales of
equipment held for lease.
"ENVIRONMENTAL CLAIMS" means all written claims by any Governmental
Authority or other Person alleging potential liability or responsibility
for violation of any Environmental Law, or for release or injury to the
environment for which a remedial or compliance obligation has arisen under
Environmental Laws.
"ENVIRONMENTAL LAWS" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with
all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities applicable to the Company, in each case relating to protection
or conservation of the environment or occupational health and safety.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA EVENT" means (a) with respect to a Pension Plan, any of the
events set forth in Section 4043(c) of ERISA or the regulations thereunder,
other than any such event for which the 30-day notice requirement under
ERISA has been waived in regulations issued by the PBGC; (b) a withdrawal
by the Company or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (d) the filing of a notice of intent to
terminate, the treatment of a Plan amendment as a termination under Section
4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to
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terminate a Pension Plan or Multiemployer Plan; (e) an event or condition
which might reasonably be expected to constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan; or (f) the imposition
of any liability under Title IV of ERISA, other than PBGC premiums due but
not delinquent under Section 4007 of ERISA, upon the Company or any ERISA
Affiliate.
"EVENT OF DEFAULT" means any of the events or circumstances specified
in Section 8.1.
"EXISTING ICG CREDIT AGREEMENT" means the credit agreement dated
December 30, 1993 among ICG, certain financial institutions, and the Bank,
as agent.
"FIXED CHARGES" means, as of any date of determination, the aggregate
principal amount of Indebtedness scheduled to be paid by the Company during
the immediately preceding four calendar quarters, plus capital expenditures
for the same period.
"FIXED CHARGE COVERAGE RATIO" means, as of any date of determination,
an amount equal to the ratio resulting as the quotient of the Company's
Cash Flow divided by Fixed Charges.
"FRB" means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to
the circumstances as of the date hereof.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"GUARANTY OBLIGATION" has the meaning specified in the definition of
"Contingent Obligation."
"ICC" means Independence Capital Corp., a Delaware corporation.
"ICC Credit Agreement" means the credit agreement between ICC and the
Bank in the form attached as EXHIBIT F.
"ICC GUARANTEE" means the guarantee and contingent purchase agreement
of ICC in the form attached as EXHIBIT E hereto.
"ICG" means Independence Capital Group, Inc., a Delaware corporation.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets
or businesses; (e) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property
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acquired by the Person (even though the rights and remedies of the seller
or bank under such agreement in the event of default are limited to
repossession or sale of such property); (f) all obligations with respect to
capital leases; (g) all net indebtedness referred to in clauses (a) through
(f) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or
in property (including accounts and contracts rights) owned by such Person,
even though such Person has not assumed or become liable for the payment of
such Indebtedness; and (h) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses
(a) through (g) above. For all purposes of this Agreement, the Indebtedness
of any Person shall include all recourse Indebtedness of any partnership or
joint venture or limited liability company in which such Person is a general
partner or a joint venturer or a member.
"INDEMNIFIED LIABILITIES" has the meaning specified in Section 10.5.
"INDEMNIFIED PERSON" has the meaning specified in Section 10.5.
"INDEPENDENT AUDITOR" has the meaning specified in subsection 6.1(a).
"INSOLVENCY PROCEEDING" means, with respect to any person, (a) any
case, action or proceeding with respect to such Person before any court or
other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial
portion of its creditors; undertaken under U.S. Federal, state or foreign
law, including the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. Section
101, ET SEQ.).
"INTEREST PAYMENT DATE" means, as to any Offshore Rate Loan, the last
day of each Interest Period applicable to such Loan and, as to any Base
Rate Loan, the last Business Day of each calendar quarter and each date
such Loan is converted into another Type of Loan, PROVIDED, HOWEVER, that
if any Interest Period for an Offshore Rate Loan exceeds three months, the
date that falls three months after the beginning of such Interest Period
and after each Interest Payment Date thereafter is also an Interest Payment
Date.
"INTEREST PERIOD" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two, three
or six months thereafter as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation; PROVIDED that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period; and
(iii) no Interest Period for any Loan shall extend beyond the
Termination Date as determined by subsection (a) of the definition of
that term.
"JOINT VENTURE" means a single-purpose corporation, partnership,
limited liability company, joint venture or other similar legal arrangement
(whether created by contract or conducted through a separate legal
5
entity) now or hereafter formed by the Company or any of its Subsidiaries
with another Person in order to conduct a common venture or enterprise with
such Person.
"LIEN" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, any financing
lease having substantially the same economic effect as any of the
foregoing, or the filing of any financing statement naming the owner of the
asset to which such lien relates as debtor, under the Uniform Commercial
Code or any comparable law), but not including the interest of a lessor
under an operating lease.
"LOAN" means the extension of credit by the Bank to the Company under
Article II, or any portion thereof remaining after or resulting from any
conversion of a Loan under Section 2.4, and may be a Base Rate Loan or an
Offshore Rate Loan (each, a "TYPE" of Loan).
"LOAN DOCUMENTS" means this Agreement and all other documents
delivered by the Company to the Bank in connection herewith.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company or the
Company and its Subsidiaries taken as a whole; (b) a material impairment of
the ability of the Company to perform under any Loan Document and to avoid
any Event of Default; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against the Company of any Loan
Document.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", within the meaning
of Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the
preceding three calendar years, has made, or been obligated to make,
contributions.
"NOTICE OF BORROWING" means a notice in substantially the form of
EXHIBIT A.
"NOTICE OF CONVERSION/CONTINUATION" means a notice in substantially
the form of EXHIBIT B.
"OBLIGATIONS" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Company
to the Bank or any Indemnified Person, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising.
"OFFSHORE RATE" means, for any Interest Period, with respect to an
Offshore Rate Loan the rate of interest per annum (rounded upward to the
next 1/16th of 1%) determined by the Bank as follows:
Offshore Rate = IBOR
-------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect on such
day (whether or not applicable to the Bank) under regulations issued
from time to time by the FRB for determining the maximum reserve
requirement (including any emergency, supplemental or
6
other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities"); and
"IBOR" means the rate of interest per annum determined by the
Bank as the rate at which dollar deposits in the approximate amount of
the Bank's Offshore Rate Loan for such Interest Period would be
offered by the BofA's Grand Cayman Branch, Grand Cayman B.W.I. (or
such other office as may be designated for such purpose by the Bank),
to major banks in the offshore dollar interbank market at their
request at approximately 11:00 a.m. (New York City time) two Business
Days prior to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
"OFFSHORE RATE LOAN" means a Loan that bears interest based on the
Offshore Rate.
"ORGANIZATION DOCUMENTS" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
"PARTICIPANT" has the meaning specified in subsection 9.8(b).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"PENSION PLAN" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Company sponsors, maintains,
or to which it makes, is making, or is obligated to make contributions, or
in the case of a multiple employer plan (as described in Section 4064(a) of
ERISA) has made contributions at any time during the immediately preceding
five (5) plan years.
"PERMITTED LIENS" has the meaning specified in Section 7.1.
"PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"PLAN" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"REORGANIZATION" means (i) the borrowing contemplated hereby, (ii) the
borrowing under the Senior Credit Agreement, (iii) the repayment of the
Company's existing senior indebtedness to Comerica Bank - Texas, (iv) the
fulfillment of net contractual commitments to senior officers of the
Company, (v) the payment of costs incurred in connection with clauses (i)
through (iv) of this sentence, (vi) the declaration of the Special Dividend
and the related Deferred Dividend Payable to Management, and (vii) the
recapitalization of the Company's outstanding Common Stock.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property
is subject.
7
"RESPONSIBLE OFFICER" means the chief executive officer or the
president of the Company, or any other officer having substantially the
same authority and responsibility; or, with respect to compliance with
financial covenants, the chief financial officer or the treasurer of the
Company, or any other officer having substantially the same authority and
responsibility.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"SENIOR AGENT" means the agent under the Senior Credit Agreement.
"SENIOR CREDIT AGREEMENT" means the Credit Agreement dated October
31,1996 among the Company, certain financial institutions and Comerica Bank
- Texas, as amended, modified, restructured and supplemented from time to
time in accordance with SECTION 7.15.
"SENIOR CREDIT DOCUMENTS" means the "Documents" as defined in the
Senior Credit Agreement, each as amended, supplemented or modified from
time to time in accordance with SECTION 7.15.
"SENIOR DEBT" means (a) all "Senior Indebtedness" (as defined in the
Senior Credit Agreement) under the Senior Credit Agreement in an aggregate
principal amount not to exceed $23,000,000 (such maximum amount to be
reduced by the amount of any principal payments made from time to time on
the term loan portion of the Senior Debt); (b) all interest and fees
payable with respect thereto (including any interest and fees accruing
subsequent to the commencement of any bankruptcy or similar proceeding with
respect to the Company, whether or not allowed or allowable as a claim in
such proceeding); (c) all obligations in respect of expenses payable under
Sections 5.1, 5.5, and 12.6 of the Senior Credit Agreement; and (d)
additional Indebtedness incurred by the Company and designated as "Senior
Debt" by notice to the Bank not to exceed $2,500,000 at any one time
outstanding.
"SENIOR LENDERS" means the lenders from time to time party to the
Senior Credit Agreement.
"SPECIAL DIVIDEND" means the special dividends declared by the Board
of Directors of the Company in the aggregate amount of $19,700,000 payable
to the Company's shareholders.
"SENIOR NOTES" means the "Notes" as defined in the Senior Credit
Agreement.
"SUBORDINATED DEBT" means all Debt, the payment of which (and the
security for) has been subordinated to the Senior Debt, including the
Obligations.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock, membership interests or
other equity interests (in the case of Persons other than corporations), is
owned or controlled directly or indirectly by the Person, or one or more of
the Subsidiaries of the Person, or a combination thereof. Unless the
context otherwise clearly requires, references herein to a "Subsidiary"
refer to a Subsidiary of the Company.
"SURETY INSTRUMENTS" means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"SWAP CONTRACT" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap
or option, bond, note or xxxx option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency swap,
cross-currency rate swap, swaption, currency option or any other,
8
similar transaction (including any option to enter into any of the
foregoing) or any combination of the foregoing, and, unless the context
otherwise clearly requires, any master agreement relating to or governing
any or all of the foregoing.
"TANGIBLE NET WORTH" means, as of any applicable date of
determination, the excess of (i) the book value of all assets of the
Company and the Subsidiaries (other than patents, patent rights,
trademarks, trade names, franchises, copyrights, goodwill, and similar
intangible assets) after all appropriate deductions (including, without
limitation, reserves for doubtful receivables, obsolescence, depreciation,
and amortization), all as determined on a consolidated basis in accordance
with GAAP, less (ii) all Debt (excluding the Deferred Dividend Payable to
Management) and plus (iii) all Subordinated Debt of the Company and its
Subsidiaries which, in accordance with GAAP, would be required to be
presented on their consolidated balance sheet at such date.
"TERMINATION DATE" means October 31, 2001.
"TYPE" has the meaning specified in the definition of "Loan."
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"UNITED STATES" and "U.S." each means the United States of America.
"WHOLLY-OWNED SUBSIDIARY" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of
each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case, at the time as of which any determination
is being made, is owned, beneficially and of record, by the Company, or by
one or more of the other Wholly-Owned Subsidiaries at the Company, or both.
1.2 OTHER INTERPRETIVE PROVISIONS. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified. The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices and other
writings, however evidenced. The term "including" is not limiting and means
"including without limitation." In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding", and the
word "through" means "to and including."
(c) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(d) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement. This
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters. All such limitations,
tests and measurements are cumulative and shall each be performed in accordance
with their terms. Unless otherwise expressly provided, any
9
reference to any action of the Agent or the Banks by way of consent, approval
or waiver shall be deemed modified by the phrase "in its/their sole
discretion."
(e) This Agreement and the other Loan Documents are the result of
negotiations between and have been reviewed by counsel to the Bank and the
Company, and are the products of both parties. Accordingly, they shall not be
construed against the Bank merely because of the Bank's involvement in their
preparation.
1.3 ACCOUNTING PRINCIPLES. Unless the context otherwise clearly requires,
all accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied. References herein to "fiscal year"
and "fiscal quarter" refer to such fiscal periods of the Company.
ARTICLE II
THE CREDIT
2.1 AMOUNT AND TERMS OF COMMITMENT. The Bank agrees, on the terms and
conditions set forth herein, to make a Loan to the Company on a Business Day
prior to November 15, 1996 in the amount of $10,000,000. The Bank shall make
only one Loan under this Agreement, although such Loan may be continued or
converted in parts, i.e. as multiple Loans hereunder, subject to the terms
hereof. Any amount repaid may not be reborrowed.
2.2 LOAN ACCOUNTS. The Loans made by the Bank shall be evidenced by one or
more loan accounts or records maintained by the Bank in the ordinary course of
business. The loan accounts or records maintained by the Bank shall be
conclusive absent manifest error in calculating the amount of the Loans made by
the Bank to the Company and the interest and payments thereon. Any failure so
to record or any error in doing so shall not, however, limit or otherwise affect
the obligation of the Company hereunder to pay any amount owing with respect to
the Loans.
2.3 PROCEDURE FOR BORROWING. The Loan shall be made upon the Company's
irrevocable written notice delivered to the Bank in the form of a Notice of
Borrowing (which notice must be received by the Bank prior to 11:00 a.m.
(Chicago time) (a) three Business Days prior to the requested Borrowing Date, in
the case of an Offshore Rate Loan; and (b) on the requested Borrowing Date, in
the case of a Base Rate Loan, specifying: (i) the amount ; (ii) the requested
Borrowing Date, which shall be a Business Day; (iii) the Type of Loan requested;
and (iv) the duration of the Interest Period applicable to such Loan. If the
Notice of Borrowing fails to specify the duration of the Interest Period for an
Offshore Rate Loan, such Interest Period shall be three months. The proceeds of
the Loan will be made available to the Company by the Bank either (i) by
crediting the account of the Company on the books of the Bank, or by wire
transfer in accordance with written instructions provided to the Bank by the
Company.
2.4 CONVERSION AND CONTINUATION ELECTIONS. (a) The Company may, upon
irrevocable written notice to the Bank in accordance with subsection 2.4(b):
(i) elect, as of any Business Day, in the case of a Base Rate Loan, or as of the
last day of the applicable Interest Period, in the case of an Offshore Rate
Loan, to convert any such Loan (or any part thereof in an amount not less than
$1,000,000, or that is in an integral multiple of $1,000,000 in excess thereof)
into a Loan of any other Type; or (ii) elect, as of the last day of the
applicable Interest Period, to continue a Loan having an Interest Period
expiring on such day (or any part thereof in an amount not less than $1,000,000,
or that is in an integral multiple of $1,000,000 in excess thereof); PROVIDED,
that if at any time the amount of any Offshore Rate Loan is reduced, by payment,
prepayment, or conversion of part thereof to be less than $1,000,000, such
Offshore Rate Loan shall automatically convert into a Base Rate Loan, and on and
after such date the right of the Company to continue such Loan as, and convert
such Loan into, an Offshore Rate Loan shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation to
be received by the Bank not later than 11:00 a.m. (Chicago time) at least (i)
three Business Days in advance of the Conversion/Continuation Date,
10
if any Loan is to be converted into or continued as an Offshore Rate Loan;
and (ii) on the Conversion/Continuation Date, if any Loan is to be converted
into a Base Rate Loan, specifying: (A) the proposed Conversion/Continuation
Date; (B) the amount of the Loan to be converted or continued; (C) the Type
of Loan resulting from the proposed conversion or continuation; and (D) other
than in the case of conversions into Base Rate Loans, the duration of the
requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to an
Offshore Rate Loan, the Company has failed to select timely a new Interest
Period to be applicable to such Loan, or if any Default or Event of Default then
exists, the Company shall be deemed to have elected to convert such Loan into a
Base Rate Loan effective as of the expiration date of such Interest Period.
(d) Unless the Bank otherwise consents, during the existence of a
Default or Event of Default, the Company may not elect to have a Loan converted
into or continued as an Offshore Rate Loan.
2.5 OPTIONAL PREPAYMENTS. Subject to Section 3.4, the Company may, at any
time or from time to time, upon not less than one Business Day's irrevocable
notice to the Bank, prepay Loans in whole or in part, in minimum amounts of
$100,000, or any multiple of $100,000 in excess thereof. Such notice of
prepayment shall specify the date and amount of such prepayment and the Type(s)
of Loans to be prepaid. If such notice is given by the Company, the Company
shall make such prepayment and the payment amount specified in such notice shall
be due and payable on the date specified therein, together with accrued interest
to each such date on the amount prepaid and any amounts required pursuant to
Section 3.4.
2.6 REPAYMENT. The Company shall repay to the Bank on the Termination Date
the aggregate principal amount of all Loans outstanding on such date. The
Company shall also prepay the Loans as required pursuant to SECTION 7.16. Any
such prepayment shall reduce the scheduled installments in inverse order of
their maturity.
2.7 INTEREST. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Offshore Rate or the Base Rate, as the case may be (and subject to
the Company's right to convert to other Types of Loans under Section 2.4), PLUS
the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of
Loans under Section 2.6 for the portion of the Loans so prepaid and upon payment
(including prepayment) in full thereof and, during the existence of any Event of
Default, interest shall be paid on demand of the Bank.
(c) Notwithstanding subsection (a) of this Section, while any Event of
Default exists or after acceleration, the Company shall pay interest (after as
well as before entry of judgment thereon to the extent permitted by law) on the
principal amount of all outstanding Loans, at a rate per annum which is
determined by adding 2% per annum to the Applicable Margin then in effect for
such Loans; PROVIDED, HOWEVER, that, on and after the expiration of any Interest
Period applicable to any Offshore Rate Loan outstanding on the date of
occurrence of such Event of Default or acceleration, the principal amount of
such Loan shall, during the continuation of such Event of Default or after
acceleration, bear interest at a rate per annum equal to the Base Rate plus 2%.
2.8 FEE. The Company shall pay an upfront fee of $50,000 to the Bank on
the Closing Date.
2.9 COMPUTATION OF FEES AND INTEREST. All computations of interest and
fees shall be made on the basis of a 360-day year and actual days elapsed (which
results in more interest being paid than if computed on the basis of a 365-day
year). Interest shall accrue during each period during which interest is
computed from the first day thereof to the last day thereof. Each determination
of an interest rate by the Bank shall be conclusive and binding on the Company
in the absence of manifest error.
11
2.10 PAYMENTS BY THE COMPANY. All payments to be made by the Company shall
be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Company shall be made to the Bank
at the address from time to time specified by the Bank for such purpose, and
shall be made in dollars and in immediately available funds, no later than 3:00
p.m. (Chicago time) on the date specified herein. Any payment received by the
Bank later than 3:00 p.m. (Chicago time) shall be deemed to have been received
on the following Business Day and any applicable interest or fee shall continue
to accrue. Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 TAXES. If any payments to the Bank under this Agreement are made from
outside the United States, the Company will not deduct any foreign taxes from
any payments it makes to the Bank. If any such taxes are imposed on any
payments made by the Company (including payments under this Section), the
Company will pay the taxes and will also pay to the Bank, at the time interest
is paid, any additional amount which the Bank specifies as necessary to preserve
the after-tax yield the Bank would have received if such taxes had not been
imposed. The Company will confirm that it has paid the taxes by giving the Bank
official tax receipts (or notarized copies) within 30 days after the due date.
3.2 ILLEGALITY. (a) If the Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for the Bank or any applicable lending office of the Bank
to make Offshore Rate Loans, then, on notice thereof by the Bank to the Company,
any obligation of the Bank to make Offshore Rate Loans shall be suspended until
the Bank notifies the Company that the circumstances giving rise to such
determination no longer exist.
(b) If the Bank determines that it is unlawful to maintain Offshore
Rate Loans, the Company shall, upon its receipt of notice of such fact and
demand from the Bank, prepay in full all Offshore Rate Loans then outstanding,
together with interest accrued thereon and amounts required under Section 3.4,
either on the last day of the Interest Period thereof, if the Bank may lawfully
continue to maintain Offshore Rate Loans to such day, or immediately, if the
Bank may not lawfully continue to maintain Offshore Rate Loans. If the Company
is required to so prepay any Offshore Rate Loan, then concurrently with such
prepayment, the Company shall borrow from the Bank, in the amount of such
repayment, a Base Rate Loan.
3.3 INCREASED COSTS AND REDUCTION OF RETURN. (a) If the Bank determines
that, due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation or (ii) the compliance by the Bank with
any guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to the Bank of agreeing to make or making, funding or maintaining any
Offshore Rate Loan, then the Company shall be liable for, and shall from time to
time, upon demand, pay to the Bank, additional amounts as are sufficient to
compensate the Bank for such increased costs.
(b) If the Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Bank (or any
applicable lending office of the Bank) or any corporation controlling the Bank
with any Capital Adequacy Regulation, affects or would affect the amount of
capital required or expected to be maintained by the Bank or any corporation
controlling the Bank and (taking into consideration the
12
Bank's or such corporation's policies with respect to capital adequacy and
the Bank's desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitment, loans, credits or
obligations under this Agreement, then, upon demand of the Bank to the
Company, the Company shall pay to the Bank, from time to time as specified by
the Bank, additional amounts sufficient to compensate the Bank for such
increase.
3.4 FUNDING LOSSES. The Company shall reimburse the Bank and hold the Bank
harmless from any loss or expense which the Bank may sustain or incur as a
consequence of: (a) the failure of the Company to make on a timely basis any
payment of principal of any Offshore Rate Loan; (b) the failure of the Company
to borrow, continue or convert a Loan after the Company has given (or is deemed
to have given) a Notice of Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Company to make any prepayment in accordance with any
notice delivered under Section 2.6; (d) the prepayment or other payment
(including after acceleration thereof) of an Offshore Rate Loan on a day that is
not the last day of the relevant Interest Period; or (e) the automatic
conversion under Section 2.4 of any Offshore Rate Loan to a Base Rate Loan on a
day that is not the last day of the relevant Interest Period; INCLUDING any such
loss or expense arising from the liquidation or reemployment of funds obtained
by it to maintain any Offshore Rate Loans or from fees payable to terminate the
deposits from which such funds were obtained.
3.5 INABILITY TO DETERMINE RATES. If the Bank determines that for any
reason adequate and reasonable means do not exist for determining the Offshore
Rate for any requested Interest Period with respect to a proposed Offshore Rate
Loan, or that the Offshore Rate applicable pursuant to subsection 2.9(a) for any
requested Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to the Bank of funding such Loan, the
Bank will promptly so notify the Company. Thereafter, the obligation of the
Bank to make or maintain Offshore Rate Loans hereunder shall be suspended until
the Bank revokes such notice in writing. Upon receipt of such notice, the
Company may revoke any Notice of Borrowing or Notice of Conversion/Continuation
then submitted by it. If the Company does not revoke such Notice, the Bank
shall make, convert or continue the Loan, as proposed by the Company, in the
amount specified in the applicable notice submitted by the Company, but such
Loans shall be made, converted or continued as a Base Rate Loan instead of an
Offshore Rate Loan, as the case may be.
3.6 SURVIVAL. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 DELIVERY OF DOCUMENTS. The obligation of the Bank to make the Loan
hereunder is subject to the condition that the Bank has received on or before
the Closing Date all of the following, in form and substance satisfactory to
the Bank:
(a) CREDIT AGREEMENT. This Agreement executed by the Company;
(b) RESOLUTIONS; INCUMBENCY. (i) Copies of the resolutions of the
board of directors of the Company authorizing the transactions contemplated
hereby, certified as of the Closing Date by the Secretary of the Company; and
(ii) a certificate of the Secretary of the Company certifying the names and true
signatures of the officers of the Company authorized to execute, deliver and
perform, as applicable, this Agreement, and all other Loan Documents to be
delivered by it hereunder;
(c) ORGANIZATION DOCUMENTS; GOOD STANDING. Each of the following
documents: (i) the articles or certificate of incorporation and the bylaws of
the Company as in effect on the Closing Date, certified by the Secretary of the
Company as of the Closing Date; and (ii) a good standing and tax good standing
certificate for the Company from
13
the Secretary of State (or similar, applicable Governmental Authority) of its
state of incorporation and each state where the Company is qualified to do
business as a foreign corporation as of a recent date.
(d) ICC GUARANTEE. The ICC Guarantee executed by ICC;
(e) RESOLUTIONS; INCUMBENCY - ICC. (i) Copies of the resolutions of
the Board of Directors of ICC authorizing transactions contemplated by the ICC
Guarantee, certified as of Closing Date by the Secretary of ICC; and (ii) a
certificate of the Secretary of ICC certifying the names and the signatures of
the officers of ICC authorized to execute, deliver, and perform, as applicable,
the ICC Guarantee and the ICC Credit Agreement;
(f) ORGANIZATION DOCUMENT; GOOD STANDING - ICC. Each of the following
documents: (i) the articles or certificate of incorporation and bylaws of ICC as
in effect on the Closing Date and the articles of merger pursuant to which ICG
has been merged into ICC, certified by the Secretary of ICC as of the Closing
Date; (ii) a good standing and tax good standing certificate for ICC from the
Secretary of State (or similar, applicable Governmental Authority) of its state
of incorporation and in each state where ICC is qualified to do business as a
foreign corporation as of a recent date;
(g) LEGAL OPINION. A favorable opinion of counsel to ICC, in
substantially the form of Exhibit D, addressed to the Bank;
(h) PAYMENT OF FEES. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with Attorney Costs of the Bank to the extent
invoiced prior to or on the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute the Bank's reasonable estimate of Attorney
Costs incurred or to be incurred by it through the closing proceedings (provided
that such estimate shall not thereafter preclude final settling of accounts
between the Company and the Bank); including any such costs, fees and expenses
arising under or referenced in Sections 2.10 and 9.4;
(i) CERTIFICATE. A certificate signed by a Responsible Officer, dated
as of the Closing Date, stating that: (i) the representations and warranties
contained in Article V are true and correct on and as of such date, as though
made on and as of such date; (ii) no Default or Event of Default exists or would
result from the execution and delivery of this Agreement; and (iii) there has
occurred since December 31, 1995 no event or circumstance that has resulted or
could reasonably be expected to result in a Material Adverse Effect; and
(j) OTHER DOCUMENTS. Such other approvals, opinions, documents or
materials as the Bank may reasonably request.
4.2 CONDITIONS TO ALL LOANS. The obligation of the Bank to make the Loan
is subject to the satisfaction of the following additional conditions precedent
on the Borrowing Date:
(a) NOTICE OF BORROWING. The Bank shall have received a Notice of
Borrowing;
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties in Article V shall be true and correct in all
material respects on and as of the Borrowing Date with the same effect as if
made on and as of such Borrowing Date (except to the extent such representations
and warranties expressly refer to an earlier date, in which case they shall be
true and correct in all material respects as of such earlier date); and
(c) NO EXISTING DEFAULT. No Default or Event of Default shall exist
or shall result from such Loan.
(d) MERGER. ICG shall have been merged with and into ICC.
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(e) EXISTING ICG AGREEMENT. The obligations of ICG under the Existing
ICG Credit Agreement shall be concurrently repaid with the Loan and the
commitment of the lenders thereunder shall have been terminated.
(f) ICC CREDIT AGREEMENT. The ICC Credit Agreement shall have become
effective.
The Notice of Borrowing submitted by the Company hereunder shall constitute a
representation and warranty by the Company hereunder, as of the date of such
notice and as of such Borrowing Date, that the conditions in this Section 4.2
are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Bank that:
5.1 CORPORATE EXISTENCE AND POWER. The Company: (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (b) has the power and authority and all
governmental licenses, authorizations, consents and approvals to own its assets,
carry on its business and to execute, deliver, and perform its obligations under
the Loan Documents; (c) is duly qualified as a foreign corporation and is
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license; and (d) is in compliance with all
Requirements of Law; except, in each case referred to in clause (c) or clause
(d), to the extent that the failure to do so would not reasonably be expected to
have a Material Adverse Effect.
5.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by the Company of this Agreement and each other Loan Document to
which the Company is party, have been duly authorized by all necessary corporate
action, and do not and will not: (a) contravene the terms of any of the
Company's Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document evidencing any
Contractual Obligation to which the Company is a party or any order, injunction,
writ or decree of any Governmental Authority to which the Company or its
property is subject; or (c) violate any Requirement of Law.
5.3 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company of
the Agreement or any other Loan Document.
5.4 BINDING EFFECT. This Agreement and each other Loan Document to which
the Company is a party constitute the legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.
5.5 LITIGATION. There are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the Company or any of its respective properties which: (a)
purport to affect or pertain to this Agreement or any other Loan Document, or
any of the transactions contemplated hereby or thereby; or (b) if determined
adversely to the Company, would reasonably be expected to have a Material
Adverse Effect. No injunction, writ, temporary restraining order or any order
of any nature has been issued by any court or other Governmental Authority
purporting to enjoin or restrain the execution, delivery or performance of this
Agreement or any other Loan Document, or directing that the transactions
provided for herein or therein not be consummated as herein or therein provided.
15
5.6 NO DEFAULT. No Default or Event of Default exists or would result from
the incurring of any Obligations by the Company. As of the Closing Date, the
Company is not in default under or with respect to any Contractual Obligation in
any respect which, individually or together with all such defaults, would
reasonably be expected to have a Material Adverse Effect, or that would, if such
default had occurred after the Closing Date, create an Event of Default under
subsection 8.1(e).
5.7 ERISA COMPLIANCE. (a) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law. Each Plan which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service, and any Governmental Authority succeeding to any of its principal
functions under the Code, and to the best knowledge of the Company, nothing has
occurred which would cause the loss of such qualification. The Company and each
ERISA Affiliate has made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Code has been made
with respect to any Plan.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably be expected to result in a Material
Adverse Effect.
(c)(i) No ERISA Event has occurred or is reasonably expected to
occur;(ii) no Pension Plan has any Unfunded Pension Liability;(iii) neither the
Company nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA);(iv) neither
the Company nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under Section 4201
or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the
Company nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.
5.8 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Loans are to
be used solely for the purposes set forth in and permitted by Section 6.12 and
Section 7.7. The Company is not generally engaged in the business of purchasing
or selling Margin Stock or extending credit for the purpose of purchasing or
carrying Margin Stock.
5.9 TITLE TO PROPERTIES. The Company has good record and indefeasible
title in fee simple to, or valid leasehold interests in, all real property
necessary or used in the ordinary conduct of its businesses, except for such
defects in title as could not, individually or in the aggregate, have a Material
Adverse Effect. As of the Closing Date, the property of the Company is subject
to no Liens, other than Permitted Liens.
5.10 TAXES. The Company has filed (or in the case of any consolidated,
unitary or combined return, the Company has been included in a return filed) all
Federal and other material tax returns and reports required to be filed, and has
paid all Federal and other taxes, assessments, fees and other governmental
charges levied or imposed upon it or its properties, income or assets otherwise
due and payable, for which failure to timely file or pay would be reasonably
likely to have a Material Adverse Effect, except those which are being contested
in good faith by appropriate proceedings and for which adequate reserves have
been provided in accordance with GAAP. There is no proposed tax assessment
against the Company or any Subsidiary that would, if made, have a Material
Adverse Effect.
5.11 FINANCIAL CONDITION. The audited consolidated financial statements of
the Company dated December 31, 1995, and the related consolidated statements of
income or operations, shareholders' equity and cash flows for the fiscal year
ended on that date and the unaudited consolidated financial statements of the
Company dated June 30, 1996, and the related consolidated statements of income
on operations, shareholders' equity and cash flows for the fiscal quarter ended
on that date:(i) were prepared in accordance with GAAP consistently applied
throughout the period covered
16
thereby, except as otherwise expressly noted therein, subject to ordinary,
good faith year end audit adjustments; (ii) fairly present the financial
condition of the Company as of the date thereof and results of operations for
the period covered thereby; and (iii) show all material indebtedness and
other liabilities, direct or contingent, of the Company as of the date
thereof, including liabilities for taxes, material commitments and Contingent
Obligations. Since December 31, 1995, there has been no Material Adverse
Effect.
5.12 ENVIRONMENTAL MATTERS. The Company conducts in the ordinary course of
business a review of the effect of existing requirements of Environmental Laws
and existing Environmental Claims on its business, operations and properties,
and as a result thereof the Company has reasonably concluded that, such
Environmental Laws and Environmental Claims could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
5.13 REGULATED ENTITIES. The Company is not an "Investment Company" within
the meaning of the Investment Company Act of 1940. The Company is not subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur
Indebtedness.
5.14 NO BURDENSOME RESTRICTIONS. The Company is not a party to or bound by
any Contractual Obligation, or subject to any restriction in any Organization
Document, or any Requirement of Law, which could reasonably be expected to have
a Material Adverse Effect.
5.15 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC. The Company owns
or is licensed or otherwise has the right to use all of the patents, trademarks,
service marks, trade names, copyrights, contractual franchises, authorizations
and other rights that are reasonably necessary for the operation of its
businesses, without conflict with the rights of any other Person. To the best
knowledge of the Company, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Company infringes upon any rights held by
any other Person. No claim or litigation regarding any of the foregoing is
pending or, to the knowledge of the Company, threatened, and no patent,
invention, device, application, principle or any statute, law, rule, regulation,
standard or code is pending or, to the knowledge of the Company, proposed,
which, in either case, could reasonably be expected to have a Material Adverse
Effect.
5.16 SUBSIDIARIES. As of the Closing Date, the Company has no Subsidiaries
and has no equity investments in any other corporation or entity other than
those specifically disclosed in SCHEDULE 5.16.
5.17 INSURANCE. The properties of the Company are insured with financially
sound and reputable insurance companies not Affiliates of the Company, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the Company operates.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as the Bank shall have any
Commitment hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied, unless the Bank waives compliance in writing:
6.1 FINANCIAL STATEMENTS. The Company shall deliver to the Bank, in form
and detail satisfactory to the Bank:
(a) as soon as available, but not later than 90 days after the end of
each fiscal year, a copy of the audited consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year and the related
17
consolidated statements of income or operations, shareholders' equity and cash
flows for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of KPMG Peat
Marwick L.L.P. or another nationally-recognized independent public accounting
firm ("INDEPENDENT AUDITOR") which report shall state that such consolidated
financial statements present fairly the financial position for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
years. Such opinion shall not be qualified or limited because of a restricted
or limited examination by the Independent Auditor of any material portion of the
Company's or any Subsidiary's records; and
(b) as soon as available, but not later than 45 days after the end of
each of the first three fiscal quarters of each fiscal year, a copy of the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
the end of such quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter, and certified by a Responsible
Officer as fairly presenting, in accordance with GAAP (subject to ordinary, good
faith year-end audit adjustments), the financial position and the results of
operations of the Company and the Subsidiaries.
6.2 CERTIFICATES; OTHER INFORMATION. The Company shall furnish to the
Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a Compliance Certificate executed by
a Responsible Officer;
(b) promptly, copies of all financial statements and reports that the
Company sends to its shareholders, and copies of all financial statements and
regular, periodical or special reports (including Forms 10-K, 10-Q and 8-K) that
the Company or any Subsidiary may make to, or file with, the SEC; and
(c) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as the Bank may
from time to time reasonably request.
6.3 NOTICES. The Company shall promptly notify the Bank:
(a) of the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default;
(b) of any matter that has resulted or may result in a Material
Adverse Effect, including (i) breach or non-performance of, or any default
under, a Contractual Obligation of the Company or any Subsidiary; (ii) any
dispute, litigation, investigation, proceeding or suspension between the Company
or any Subsidiary and any Governmental Authority; or (iii) the commencement of,
or any material development in, any litigation or proceeding affecting the
Company or any Subsidiary; including pursuant to any applicable Environmental
Laws;
(c) of the occurrence of any of the following events affecting the
Company or any ERISA Affiliate (but in no event more than 10 Business Days after
such event), and deliver to the Bank a copy of any notice with respect to such
event that is filed with a Governmental Authority and any notice delivered by a
Governmental Authority to the Company or any ERISA Affiliate with respect to
such event: (i) an ERISA Event; (ii) a material increase in the Unfunded Pension
Liability of any Pension Plan; (iii) the adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the Code by the Company or
any ERISA Affiliate; or (iv) the adoption of any amendment to a Plan subject to
Section 412 of the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liability; and
(d) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated Subsidiaries.
18
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each
notice under subsection 6.3(a) shall describe with particularity any and all
clauses or provisions of this Agreement or other Loan Document that have been
(or foreseeably will be) breached or violated.
6.4 PRESERVATION OF CORPORATE EXISTENCE, ETC. The Company shall: (a)
preserve and maintain in full force and effect its corporate existence and
good standing under the laws of its state or jurisdiction of incorporation;
(b) preserve and maintain in full force and effect all governmental rights,
privileges, qualifications, permits, licenses and franchises necessary or
desirable in the normal conduct of its business; (c) use reasonable efforts,
in the ordinary course of business, to preserve its business organization and
goodwill; and (d) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of which
could reasonably be expected to have a Material Adverse Effect.
6.5 MAINTENANCE OF PROPERTY. The Company shall maintain, and shall
cause each Subsidiary to maintain, and preserve all its property which is
used or useful in its business in good working order and condition, ordinary
wear and tear excepted.
6.6 INSURANCE. The Company shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss
or damage of the kinds customarily insured against by Persons engaged in the
same or similar business, of such types and in such amounts as are
customarily carried under similar circumstances by such other Persons.
6.7 PAYMENT OF OBLIGATIONS. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable,
all their respective obligations and liabilities, including: (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP are
being maintained by the Company or such Subsidiary; (b) all lawful claims
which, if unpaid, would by law become a Lien upon its property; and (c) all
indebtedness, as and when due and payable, but subject to any subordination
provisions contained in any instrument or agreement evidencing such
Indebtedness.
6.8 COMPLIANCE WITH LAWS. The Company shall comply, and shall cause
each Subsidiary to comply, in all material respects with all Requirements of
Law of any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
6.9 COMPLIANCE WITH ERISA. The Company shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal
or state law; (b) cause each Plan which is qualified under Section 401(a) of
the Code to maintain such qualification; and (c) make all required
contributions to any Plan subject to Section 412 of the Code.
6.10 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The Company shall
maintain and shall cause each Subsidiary to maintain proper books of record
and account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Company and such Subsidiary. The
Company shall permit, and shall cause each Subsidiary to permit,
representatives and independent contractors of the Bank to visit and inspect
any of their respective properties during normal business hours, to examine
their respective corporate, financial and operating records, and make copies
thereof or abstracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective directors, officers, and
independent public accountants, all at the expense of the Company and at such
reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Company;
19
PROVIDED, HOWEVER, when an Event of Default exists the Bank may do any of the
foregoing at the expense of the Company at any time during normal business
hours and without advance notice.
6.11 ENVIRONMENTAL LAWS. The Company shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws except where the failure to so comply
would not have a Material Adverse Effect.
6.12 USE OF PROCEEDS. The Company shall use the proceeds of the Loan
to make a distribution to its shareholders (including ICC) and the proceeds
thereof shall then be used by ICC to repay its obligations under the Existing
ICG Agreement, which ICC assumed as a result of its merger with ICG prior to
such distribution.
ARTICLE VII
NEGATIVE COVENANTS
So long as the Bank shall have any Loan or other Obligation shall remain
unpaid or unsatisfied, unless the Bank waives compliance in writing:
7.1 LIMITATION ON LIENS. The Company shall not, and shall not suffer
or permit any Subsidiary to, directly or indirectly, make, create, incur,
assume or suffer to exist any Lien upon or with respect to any part of its
property, whether now owned or hereafter acquired, other than the following
("PERMITTED LIENS"):
(a) any Lien existing on property of the Company or any
Subsidiary on the Closing Date and set forth in SCHEDULE 7.1 securing
Indebtedness outstanding on such date or Lien associated with the Senior
Credit Agreement, as it may be amended, increased or modified from time to
time;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 6.7, provided that no
notice of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary
course of business which are not delinquent or remain payable without penalty
or which are being contested in good faith and by appropriate proceedings,
which proceedings have the effect of preventing the forfeiture or sale of the
property subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on the property of the Company or its Subsidiary
securing (i) the non-delinquent performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, (ii) contingent
obligations on surety and appeal bonds, and (iii) other non-delinquent
obligations of a like nature; in each case, incurred in the ordinary course
of business, provided all such Liens in the aggregate would not (even if
enforced) cause a Material Adverse Effect;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially
20
detract from the value of the property subject thereto or interfere with the
ordinary conduct of the businesses of the Company and its Subsidiaries; and
(h) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a creditor
depository institution; PROVIDED THAT (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated
by the FRB, and (ii) such deposit account is not intended by the Company or
any Subsidiary to provide collateral to the depository institution.
7.2 PROPERTY TRANSFER, MERGER OR LEASE-BACK. The Company shall not,
nor permit any Subsidiary to, (a) sell, lease, transfer or otherwise dispose
of all or, except as to the sale of inventory or unneeded equipment in the
ordinary course of business, any material part of its properties and assets
(whether in one transaction or in a series of transactions), (b) change its
name, consolidate with or merge into any other corporation, permit another
corporation to merge into it, acquire all or substantially all the properties
or assets of any other Person, enter into any reorganization or
recapitalization or reclassify its capital stock, or (c) enter into any
sale-leaseback transaction, provided that the Company and its Subsidiaries
may make transfers of assets among themselves.
7.3 ACQUIRE SECURITIES. The Company shall not, nor permit any
Subsidiary to, purchase or hold beneficially any stock or other securities
of, or make any investment or acquire any interest whatsoever in, any other
Person except for investments:
(a) in commercial paper, maturing within 270 days after
acquisition thereof, which has the highest or second highest credit rating
given by either Standard & Poor's Corporation or Xxxxx'x Investors Service,
Inc.;
(b) in obligations, maturing within 12 months after acquisition
thereof, issued or unconditionally guaranteed by the United States of America
or an instrumentality or agency thereof and entitled to the full faith and
credit of the United States of America;
(c) in demand deposits, and time deposits (including
certificates of deposit) maturing within 12 months from the date of deposit
thereof, with any office of the Bank or a Senior Lender, any of a Senior
Lender's affiliates, or any national or state bank or trust company which is
organized under the laws of the United States of America or any state therein
and which has capital, surplus and undivided profits of at least
$100,000,000; or
(d) in repurchase obligations of any bank or trust company
described in the above subsection (c) which relate to the repurchase of
obligations described in the above subsection (b).
7.4 LIMITATION ON INDEBTEDNESS. The Company shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except: (a) Indebtedness incurred pursuant to this Agreement; (b)
Indebtedness consisting of Contingent Obligations permitted pursuant to Section
7.8; (c) Indebtedness incurred pursuant to the Senior Credit Agreement; (d)
Indebtedness existing on the Closing Date and set forth in SCHEDULE 7.5; and (e)
additional Indebtedness in an amount not to exceed $2,500,000 for the sole
purpose of acquiring plant and equipment.
7.5 TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall not
suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Company, (a) except upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Company or
such Subsidiary, and (b) except as contemplated by the Reorganization.
7.6 USE OF PROCEEDS. The Company shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance
21
indebtedness of the Company or others incurred to purchase or carry Margin
Stock, (iii) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (iv) to acquire any security in any transaction that is
subject to Section 13 or 14 of the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
7.7 CONTINGENT OBLIGATIONS. The Company shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume or suffer to exist
any Contingent Obligations except: (a) endorsements for collection or deposit
in the ordinary course of business; (b) Contingent Obligations of the Company
and its Subsidiaries existing as of the Closing Date and listed in SCHEDULE
7.8; and (c) Contingent Obligations arising out of the Reorganization.
7.8 JOINT VENTURES. The Company shall not, and shall not suffer or
permit any Subsidiary to enter into any Joint Venture, other than in the
ordinary course of business.
7.9 LEASE OBLIGATIONS. The Company shall not, and shall not suffer or
permit any Subsidiary to, create or suffer to exist any obligations for the
payment of rent for any property under lease or agreement to lease, except for:
(a) leases of the Company and of Subsidiaries in existence on the Closing Date
and any renewal, extension or refinancing thereof; and (b) operating leases
entered into by the Company or any Subsidiary after the Closing Date in the
ordinary course of business requiring payments not in excess of $200,000 in any
fiscal year.
7.10 RESTRICTED PAYMENTS. The Company shall not, and shall not suffer
or permit any Subsidiary to, declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities
on account of any shares of any class of its capital stock, or purchase,
redeem or otherwise acquire for value any shares of its capital stock or any
warrants, rights or options to acquire such shares, now or hereafter
outstanding; except that the Company and any Wholly-Owned Subsidiary may:
(a) declare and make dividend payments or other distributions payable solely
in its common stock; (b) purchase, redeem or otherwise acquire shares of its
common stock or warrants or options to acquire any such shares with the
proceeds received from the substantially concurrent issue of new shares of
its common stock; and (c) declare and make dividend payments or other
distributions arising out of the Reorganization.
7.11 ERISA. The Company shall not, and shall not suffer or permit any
of its ERISA Affiliates to: (a) engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably expected to result in liability of the
Company, or (b) engage in a transaction that could be subject to Section 4069
or 4212(c) of ERISA.
7.12 CHANGE IN BUSINESS. The Company shall not, and shall not suffer or
permit any Subsidiary to, engage in any material line of business substantially
different from those lines of business carried on by the Company and its
Subsidiaries on the date hereof.
7.13 ACCOUNTING CHANGES. The Company shall not, and shall not suffer
or permit any Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year of the Company or of any Subsidiary.
7.14 MODIFICATION, ETC. OF CERTAIN AGREEMENTS. The Company shall not
consent to or enter into any amendment, supplement or other modification of
any term, provision or agreement contained in the Senior Credit Documents, if
such amendment, supplement or other modification would increase the aggregate
principal amount of Senior Debt outstanding thereunder at any time to more
than an amount equal to $23,000,000 minus the aggregate amount of principal
payments made at or prior to such time on the term loan portion of the Senior
Debt.
7.15 FINANCIAL COVENANTS.
22
(a) TANGIBLE NET WORTH. The Company shall maintain Tangible Net
Worth (plus Subordinated Debt) in an amount not less than the following
amounts at the end of each calendar quarter during each of the following
respective periods:
PERIODS AMOUNT
------- ------
(i) From December 31, 1996 through $ 500,000
September 30, 1997
(ii) From December 31, 1997 through $2,250,000
September 30, 1998
(iii) From December 31, 1998 and $4,000,000
thereafter
(b) CASH FLOW COVERAGE RATIO. The Company shall maintain as
of the end of each calendar quarter a Cash Flow Coverage Ratio of not less
than 1.25 to 1.00.
(c) FIXED CHARGE COVERAGE RATIO. The Company shall maintain
as of the end of each calendar quarter a Fixed Charge Coverage Ratio
(computed on the basis of the previous twelve-month period) of not less than
1.0:1.0 (or such lesser ratio as may have been agreed to from time to time by
the Senior Lenders).
(d) MAXIMUM SENIOR DEBT TO EBITDA RATIO. The Company shall
maintain as of the end of each quarter a ratio of Senior Debt to EBITDA of
not more than the following respective ratios:
PERIODS AMOUNT
------- ------
From December 31, 1996 through 4.25:1.0
March 31, 1997
From June 30, 1997 through 4.0:1.0
September 30, 1997
From December 31, 1997 through 3.75:1.0
September 30, 1998
From December 31, 1998 and thereafter 3.5:1.0
7.16 OFFERING. The Company shall apply the proceeds of all equity
offerings (net of expenses related thereto) first in an amount necessary to
pay down the term loan portion of the Senior Credit Agreement outstanding to
the greater of $2,000,000 or 80% of the appraised value of the Company's
plant and equipment as determined by Comerica Bank - Texas. The Company
shall apply the proceeds of all debt offerings (net of expenses related
thereto) to prepay the principal payable hereunder and under the Loan
Documents.
23
ARTICLE VIII
EVENTS OF DEFAULT
8.1 EVENT OF DEFAULT. Any of the following shall constitute an "EVENT
OF DEFAULT":
(a) NON-PAYMENT. The Company fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan, or (ii)
within five days after the same becomes due, any interest, fee or any other
amount payable hereunder or under any other Loan Document; or
(b) REPRESENTATION OR WARRANTY. Any representation or warranty
by the Company made or deemed made herein, in any other Loan Document, or
which is contained in any certificate, document or financial or other
statement by the Company, or any Responsible Officer, furnished at any time
under this Agreement, or in or under any other Loan Document, is incorrect in
any material respect on or as of the date made or deemed made; or
(c) SPECIFIC DEFAULTS. The Company fails to perform or observe
any term, covenant or agreement contained in any of Sections 6.1, 6.2, 6.3 or
6.9 or in Article VII; or
(d) OTHER DEFAULTS. The Company fails to perform or observe
any other term or covenant contained in this Agreement or any other Loan
Document, and such default shall continue unremedied for a period of 30 days
after the earlier of (i) the date upon which a Responsible Officer knew or
reasonably should have known of such failure and (ii) the date upon which
written notice thereof is given to the Company by the Bank; or
(e) CROSS-DEFAULT. (i) The Company or any Subsidiary (A) fails
to make any payment in respect of any Indebtedness or Contingent Obligation,
having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $100,000 when due
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) and such failure continues after the applicable grace or notice
period, if any, specified in the relevant document on the date of such
failure; or (B) fails to perform or observe any other condition or covenant,
or any other event shall occur or condition exist, under any agreement or
instrument relating to any such Indebtedness or Contingent Obligation, and
such failure continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure if the effect
of such failure, event or condition is to cause, or to permit the holder or
holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be declared to be
due and payable prior to its stated maturity, or such Contingent Obligation
to become payable or cash collateral in respect thereof to be demanded;
provided that if the failure, event or condition shall not be continuing at
the time of a proposed declaration under SECTION 8.2, no such declaration may
be made.
(f) INSOLVENCY; VOLUNTARY PROCEEDINGS. The Company or any
Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject
to applicable grace periods, if any, whether at stated maturity or otherwise;
(ii) voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(g) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company or any Subsidiary, or
any writ, judgment, warrant of attachment, execution or similar process, is
issued or levied against a substantial part of the Company's or any
Subsidiary's properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded within 60 days
after commencement, filing or levy; (ii) the Company or any Subsidiary admits
the material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief
24
(or similar order under non-U.S. law) is ordered in any Insolvency
Proceeding; or (iii) the Company or any Subsidiary acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for
itself or a substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Company under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess
of $50,000; (ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds $100,000; or (iii) the Company or any ERISA
Affiliate shall fail to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in an
aggregate amount in excess of $50,000; or
(i) MONETARY JUDGMENTS. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is entered
against the Company or any Subsidiary involving in the aggregate a liability
(to the extent not covered by independent third-party insurance as to which
the insurer does not dispute coverage) as to any single or related series of
transactions, incidents or conditions, of $250,000 or more, and the same
shall remain unsatisfied, unvacated and unstayed pending appeal for a period
of 10 days after the entry thereof; or
(j) NON-MONETARY JUDGMENTS. Any non-monetary judgment, order
or decree is entered against the Company or any Subsidiary which does or
would reasonably be expected to have a Material Adverse Effect, and there
shall be any period of 10 consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect.
8.2 REMEDIES. If any Event of Default occurs, the Bank may: (a)
declare the commitment of the Bank to make Loans to be terminated, whereupon
such commitment shall be terminated; (b) declare the unpaid principal amount
of all outstanding Loans, all interest accrued and unpaid thereon, and all
other amounts owing or payable hereunder or under any other Loan Document to
be immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Company;
and (c) exercise all rights and remedies available to it under the Loan
Documents or applicable law; PROVIDED, HOWEVER, that upon the occurrence of
any event specified in subsection (f) or (g) of Section 8.1 (in the case of
clause (i) of subsection (g) upon the expiration of the 60-day period
mentioned therein), the obligation of the Bank to make Loans shall
automatically terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid shall automatically
become due and payable without further act of the Bank.
8.3 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any
other rights, powers, privileges or remedies provided by law or in equity, or
under any other instrument, document or agreement now existing or hereafter
arising.
ARTICLE IX
SUBORDINATION
9.1 AGREEMENT TO SUBORDINATE. The Company and the Bank agree that the
payment of all Obligations is subordinated in right of payment, to the extent
and in the manner provided in this ARTICLE IX, to the prior payment in full
in cash or cash equivalents of all Senior Debt, and that the subordination is
for the benefit of the holders of the Senior Debt.
9.2 LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any distribution to
creditors of the Company in a liquidation or dissolution of the Company or in
a bankruptcy, reorganization, insolvency, receivership or similar proceeding
25
relating to the Company or its property or in an assignment for the benefit
of creditors or any marshalling of the Company's assets and liabilities:
(i) the holders of the Senior Debt shall be entitled to
receive payment in full in cash or cash equivalents of all Senior Debt
before any Person shall be entitled to receive any payment from the
Company with respect to the Obligations (except that such Persons may
receive securities that are subordinated to at least the same extent as
the Obligations to the Senior Debt to the extent authorized by a final
order or decree entered in a reorganization proceeding giving effect,
and stating in such order or decree that effect has been given, to
subordination of the Obligations to the Senior Debt, PROVIDED that (i)
the Senior Debt is assumed by the new corporation, if any, resulting
from any such reorganization and (ii) the rights of the holders of the
Senior Debt are not, without the consent of such holders, altered by
such reorganization); and
(ii) until all Senior Debt is paid in full in cash or
cash equivalents, any distribution from the Company with respect to the
Obligations to which any Person would be entitled but for this ARTICLE
IX shall be made to the holders of the Senior Debt (except that such
Persons may receive securities that are subordinated to at least the
same extent as the Obligations to the Senior Debt to the extent
authorized by a final order or decree entered in a reorganization
proceeding giving effect, and stating in such order or decree that
effect has been given, to subordination of the Obligations to the
Senior Debt, PROVIDED that (i) the Senior Debt is assumed by the new
corporation, if any, resulting from any such reorganization and (ii)
the rights of the holders of the Senior Debt are not, without the
consent of such holders, altered by such reorganization).
Each holder of the Obligations shall retain the right to vote its claim
in any bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property, PROVIDED that if such
holder fails to file a proof of claim with respect to the Obligations held by
it by 10 days before the applicable bar date, the Senior Agent may file a
proof of claim on behalf of such holder in such proceeding and vote such
claim.
9.3 DEFAULT ON SENIOR DEBT. (a) Unless SECTION 9.2 shall be
applicable, the Company may not make any payment or distribution to the Bank
upon or in respect of the Obligations for cash or property until all
principal and other obligations with respect to the Senior Debt have been
paid in full if:
(i) a default in the payment of any principal of, or interest
on, Senior Debt occurs and is continuing; or
(ii) a default, other than a payment default, on Senior Debt
occurs and is continuing that would then permit the holders of such Senior
Debt to accelerate its maturity and the Bank has received written notice
(the "NONPAYMENT DEFAULT NOTICE") of the default from the Senior Agent.
With respect to any Nonpayment Default Notice received by the Bank (x) no
subsequent Nonpayment Default Notice received within 365 calendar days
after such first Nonpayment Default Notice shall be effective for purposes
of this Section and (y) no nonpayment default that existed or was
continuing on the date of delivery of any Nonpayment Default Notice shall
be, or be made, the basis for a subsequent Nonpayment Default Notice.
(b) The Company may and shall resume payments on and distributions in
respect of the Obligations (including any missed payments, which the Company
will make as soon as permitted hereunder) when:
(i) the default is cured or waived or acceleration is rescinded
or annulled or the Senior Debt shall have been discharged in accordance
with this ARTICLE IX or as agreed to by the holders of the Senior Debt, or
(ii) 179 days shall pass after a Nonpayment Default Notice was
received if the maturity of such Senior Debt has not been accelerated at
such time,
26
if this ARTICLE IX otherwise permits the payment at such time.
9.4 NOTICE OF ACCELERATION OF OBLIGATIONS. If any Event of Default
described in SECTION 8.1(f) or (g) shall have occurred and be continuing and
the Bank shall have given notice thereof to the Company and the Senior Agent,
the Bank may accelerate the Obligations and demand payment of the
Obligations. If any Event of Default under SECTION 8.1(a) or (e) shall have
occurred or the Company fails to perform or observe any term, covenant or
agreement contained in SECTIONS 7.5, 7.15 or 7.16 and such failure or Event
of Default shall be continuing for a period of 30 days and the Bank shall
have given notice thereof to the Company and the Senior Agent, the Bank may
not (i) accelerate the Obligations until the earlier of (x) 90 calendar days
(or 180 calendar days in the case of an Event of Default under SECTION
8.1(e)) after the date of such notice (and only then if the Event of Default
or failure shall be continuing) and (y) the date on which the Senior Debt is
accelerated or (ii) demand payment of the Obligations or commence any action,
suit or other legal or equitable proceeding (including without limitation any
bankruptcy, insolvency, reorganization or similar proceeding) in respect of
the Obligations, exercise any contractual or statutory right of setoff or
bankers lien or otherwise exercise remedies hereunder (other than termination
of the Commitment) until the earlier of (x) 90 (or 180 days in the case of an
Event of Default under Section 8.1(e)) days after the date of such notice
(and only then if the Event of Default or failure shall be continuing) and
(y) the date on which the Senior Lenders have taken such action in respect of
the Senior Debt; PROVIDED that if any such acceleration of the Senior Debt is
rescinded by the Senior Lenders, the Bank agrees promptly to rescind any
acceleration then in effect of the Loan hereunder if such acceleration of the
Loan hereunder was effected at a time when the Senior Debt had already been
accelerated. Otherwise, until the Senior Debt has been paid in full and any
financing commitments with respect to the Senior Debt have been terminated,
no other acceleration by the Bank shall be effective.
9.5 WHEN DISTRIBUTION MUST BE PAID OVER. In the event that the Bank
receives any payment (including by way of set-off) on any of the Obligations
at a time when such payment is prohibited by SECTION 9.2 or 9.3 hereof, such
payment shall (if at the time the Bank has actual knowledge of such
prohibition) be held by the Bank in trust for the benefit of, and shall in
any event promptly upon the Bank becoming aware of such prohibition be paid
forthwith over and delivered upon written request to, the holders of the
Senior Debt entitled thereto, for application to the payment of all
obligations with respect to Senior Debt remaining unpaid to the extent
necessary to pay such obligations in full in accordance with their terms,
after giving effect to any concurrent payment or distribution to or for the
benefit of the holders of the Senior Debt.
9.6 NOTICE BY COMPANY. The Company shall promptly notify the Bank in
writing of any facts known to the Company that would cause a payment of any
Obligations to violate this ARTICLE IX, but failure to give such notice shall
not affect the subordination of the Obligations to the Senior Debt as
provided in this ARTICLE IX.
9.7 SUBROGATION. After all Senior Debt is paid in full in accordance
with its then applicable terms and until the Obligations are paid in full,
the Bank shall be subrogated to the rights of the holders of the Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Bank have been applied to the payment
of Senior Debt. A distribution made under this ARTICLE IX to the holders of
the Senior Debt that otherwise would have been made to the Bank is not, as
between the Company and the Bank, a payment by the Company on the Obligations.
9.8 RELATIVE RIGHTS. This ARTICLE IX defines the relative rights of the
Bank and the holders of the Senior Debt. Nothing in this Article shall:
(a) impair, as between the Company and the Bank, the obligation of
the Company, which is absolute and unconditional, to pay the Obligations
in accordance with their terms;
(b) affect the relative rights of the Bank and creditors of the
Company other than the holders of the Senior Debt; or
27
(c) prevent the Bank from exercising its available remedies upon an
Event of Default, subject to SECTION 9.4 and to the rights of the holders
of the Senior Debt to receive distributions and payments otherwise payable
to the Bank.
If the Company fails because of this ARTICLE IX to pay any Obligation on
the due date therefor, or if any such payment is received by the Bank but must
be paid over to the holders of the Senior Debt (whether under SECTION 9.2 or 9.5
or otherwise), the failure is still an Event of Default.
9.9 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No right of the holders
of the Senior Debt to enforce the subordination of the Obligations shall be
impaired by any act or failure to act by the Company or the Bank or by the
failure of the Company or the Bank to comply with this Agreement.
9.10 AMENDMENTS. The provisions of this ARTICLE IX shall not be amended or
modified without the written consent of the Senior Lenders.
9.11 REINSTATEMENT. The provisions of this Article IX shall continue to be
effective or reinstated, as the case may be, if at any time any payment of the
Senior Debt is rescinded or must otherwise be returned by any holder of Senior
Debt or any of such holder's agents upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such payment had not
been made.
ARTICLE X
MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company therefrom, shall be effective unless the same shall be
in writing and signed by the Bank and the Company, and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
10.2 NOTICES. (a) All notices, requests, consents, approvals, waivers and
other communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided that any
matter transmitted by the Company by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on the
signature page hereof with respect to such Person, and (ii) shall be followed
promptly by delivery of a hard copy original thereof) and mailed, telecopied or
delivered, to the address or facsimile number specified for notices on the
signature page hereof with respect to such Person; or, as directed to the
Company or the Bank, to such other address as shall be designated by such party
in a written notice to the other parties, and as directed to any other party, at
such other address as shall be designated by such party in a written notice to
the Company and the Bank.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II shall not be effective until actually received by
the Bank.
(c) Any agreement of the Bank herein to receive certain notices by
telephone or facsimile is solely for the convenience and at the request of the
Company. The Bank shall be entitled to rely on the authority of any Person
purporting to be a Person authorized by the Company to give such notice and the
Bank shall not have any liability to the Company or other Person on account of
any action taken or not taken by the Bank in reliance upon such telephonic or
facsimile notice. The obligation of the Company to repay the Loans shall not be
affected in any way or to any extent by any failure by the Bank to receive
written confirmation of any telephonic or facsimile notice or the receipt by the
28
Bank of a confirmation which is at variance with the terms understood by the
Bank to be contained in the telephonic or facsimile notice.
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of the Bank, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege.
10.4 COSTS AND EXPENSES. The Company shall: (a) whether or not the
transactions contemplated hereby are consummated, pay or reimburse the Bank
within five Business Days after demand (subject to subsection 4.1(e)) for all
reasonable costs and expenses incurred by the Bank in connection with the
development, preparation, delivery, administration and execution of, and any
amendment, supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Loan Document and any other documents prepared
in connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including Attorney Costs incurred by the Bank
with respect thereto; and (b) pay or reimburse the Bank within five Business
Days after demand for all costs and expenses (including Attorney Costs) incurred
by it in connection with the enforcement, attempted enforcement, or preservation
of any rights or remedies under this Agreement or any other Loan Document during
the existence of an Event of Default or after acceleration of the Loans
(including in connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate proceeding).
10.5 INDEMNIFICATION. Whether or not the transactions contemplated hereby
are consummated, the Company shall indemnify, defend and hold the Bank and each
of its officers, directors, employees, counsel, agents and attorneys-in-fact
(each, an "INDEMNIFIED PERSON") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including Attorney Costs) of any
kind or nature whatsoever which may at any time (including at any time following
repayment of the Loans) be imposed on, incurred by or asserted against any such
Person in any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein, or the transactions contemplated hereby,
or any action taken or omitted by any such Person under or in connection with
any of the foregoing, including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate proceeding) related
to or arising out of this Agreement or the Loans or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "INDEMNIFIED LIABILITIES"); PROVIDED, that the
Company shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting solely from the gross negligence or
willful misconduct of such Indemnified Person. The agreements in this Section
shall survive payment of all other Obligations.
10.6 PAYMENTS SET ASIDE. To the extent that the Company makes a payment to
the Bank, or the Bank exercises its right of set-off, and such payment or the
proceeds of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Bank in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
Insolvency Proceeding or otherwise, then to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred.
10.7 SUCCESSORS AND ASSIGNS. The Company hereby consents to any assignment
or transfer by the Bank of any of its rights or obligations under this Agreement
to ICC. The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of the Bank.
10.8 ASSIGNMENTS, PARTICIPATIONS, ETC. (a) The Bank may at any time and
from time to time, with the prior consent of the Company, at all times other
than during the existence of an Event of Default, which consent shall not be
unreasonably withheld (provided, that no consent of the Company shall be
required in connection with any assignment and delegation by the Bank to an
Affiliate of the Bank), assign and delegate to one or more commercial banks
(each an "Assignee") all, or any part of all, of the Loans, the Commitment and
the other rights and obligations of the Bank
29
hereunder, in a minimum amount of $5,000,000; provided, however, that the
Company may continue to deal solely and directly with the Bank in connection
with the interest so assigned to an Assignee until written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the
Company by the Bank and the Assignee.
(b) The Bank may at any time and from time to time, without notice to
or the consent of the Company, sell to one or more commercial banks or other
Persons (a "PARTICIPANT") participating interests in any Loans, the Commitment
and the other interests of the Bank hereunder and under the other Loan
Documents.
(c) Notwithstanding any other provision in this Agreement, the Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the FRB or 31 U.S. Treasury Regulation
CFR Section 203.14, and such Federal Reserve Bank may enforce such pledge or
security interest in any manner permitted under applicable law.
10.9 CONFIDENTIALITY. The Bank agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by the Company and
provided to it by the Company or any Subsidiary, under this Agreement or any
other Loan Document, and the Bank shall not use any such information other than
in connection with or in enforcement of this Agreement and the other Loan
Documents or in connection with other business now or hereafter existing or
contemplated with the Company or any Subsidiary; except to the extent such
information (i) was or becomes generally available to the public other than as a
result of disclosure by the Bank, or (ii) was or becomes available on a
non-confidential basis from a source other than the Company, provided that such
source is not bound by a confidentiality agreement with the Company known to the
Bank; PROVIDED, HOWEVER, that the Bank may disclose such information (A) at the
request or pursuant to any requirement of any Governmental Authority to which
the Bank is subject or in connection with an examination of the Bank by any such
authority; (B) pursuant to subpoena or other court process; (C) when required to
do so in accordance with the provisions of any applicable Requirement of Law;
(D) to the extent reasonably required in connection with any litigation or
proceeding to which the Bank or may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to the Bank's independent auditors and other
professional advisors; (G) to any Participant or Assignee, actual or potential,
provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Bank hereunder; (H) as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which the Company or any Subsidiary is party or is deemed
party with the Bank; and (I) to its Affiliates.
10.10 SET-OFF. In addition to any rights and remedies of the Bank provided
by law, if an Event of Default exists or the Loans have been accelerated, the
Bank is authorized at any time and from time to time, without prior notice to
the Company, any such notice being waived by the Company to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, the Bank to or for the credit or the account
of the Company against any and all Obligations owing to the Bank, now or
hereafter existing, irrespective of whether or not the Bank shall have made
demand under this Agreement or any Loan Document and although such Obligations
may be contingent or unmatured. The Bank agrees promptly to notify the Company
after any such set-off and application made by the Bank; PROVIDED, HOWEVER, that
the failure to give such notice shall not affect the validity of such set-off
and application.
10.11 AUTOMATIC DEBITS OF FEES. With respect to any fee, or any other cost
or expense (including Attorney Costs) due and payable to the Bank under the Loan
Documents, the Company hereby irrevocably authorizes the Bank to debit any
deposit account of the Company with the Bank in an amount such that the
aggregate amount debited from all such deposit accounts does not exceed such fee
or other cost or expense. If there are insufficient funds in such deposit
accounts to cover the amount of the fee or other cost or expense then due, such
debits will be reversed (in whole or in part, in the Bank's sole discretion) and
such amount not debited shall be deemed to be unpaid. No such debit under this
Section shall be deemed a set-off.
30
10.12 COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.13 SEVERABILITY. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
10.14 NO THIRD PARTIES BENEFITED. This Agreement is made and entered into
for the sole protection and legal benefit of the Company, the Bank and their
permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
10.15 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS; PROVIDED, HOWEVER THAT THE
PROVISIONS OF ARTICLE IX OF THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS; PROVIDED, FURTHER, THAT THE
BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
10.16 ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding between the Company
and the Bank, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Chicago, Illinois by their proper and duly
authorized officers as of the day and year first above written.
XXXXXXXXX SIGN COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------------------------
Title: Chairman
-----------------------------------------------
NOTICES:
Attention: Xxxxxxx X. Xxxxxxx, Chief Financial Office
-------------------------------------------
Telephone: 000-000-0000
-------------------------------------------
Facsimile: 000-000-0000
-------------------------------------------
cc: Independence Capital Corp.
00 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Controller
BANK OF AMERICA ILLINOIS
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------------------
Title: Senior Vice President
NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF
CONVERSION/CONTINUATION):
Bank of America Illinois
000 X. XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxx
-------------------------------------------
Telephone: (000) 000-0000
-------------------------------------
Facsimile: (000) 000-0000
-------------------------------------
32
DOMESTIC AND OFFSHORE LENDING OFFICE:
000 Xxxxx XxXxxxx Xxxxxx
-----------------------------
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxx
-------------------------------------------
Telephone: (000) 000-0000
-------------------------------------
Facsimile: (000) 000-0000
-------------------------------------
33
EXHIBIT A
NOTICE OF BORROWING
Date: ______________________ , 199_
To: Bank of America Illinois regarding that certain Subordinated Credit
Agreement dated as of October 31, 1996 (as extended, renewed, amended
or restated from time to time, the "AGREEMENT") between Xxxxxxxxx Sign
Company and Bank of America Illinois (the "BANK")
Ladies and Gentlemen:
The undersigned, Xxxxxxxxx Sign Company (the "COMPANY"), refers to the
Agreement, the terms defined therein being used herein as therein defined, and
hereby gives you notice irrevocably, pursuant to Section 2.3 of the Agreement,
of the Loan specified below:
1. The Business Day of the proposed Loan is ______________________, 19__.
2. The aggregate amount of the proposed Loan is $________________________.
3. The Loan is to be comprised of $_______________of [Base Rate][Offshore
Rate] Loans.
4. [The duration of the Interest Period for the Offshore Rate Loans shall
be _____ months].
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the proposed Loan, before and
after giving effect thereto and to the application of the proceeds therefrom:
(a) the representations and warranties of the Company contained in
Article V of the Agreement are true and correct as though made on and as of
such date (except to the extent such representations and warranties relate
to an earlier date, in which case they are true and correct as of such
date); and
(b) no Default or Event of Default has occurred and is continuing, or
would result from such proposed Loan.
A-1
XXXXXXXXX SIGN COMPANY
By:
-------------------------------------------------
Title:
----------------------------------------------
A-2
EXHIBIT B
NOTICE OF CONVERSION/CONTINUATION
Date: ______________________ , 199_
To: Bank of America Illinois regarding that certain Subordinated Credit
Agreement dated as of October 31, 1996 (as extended, renewed, amended
or restated from time to time, the "AGREEMENT") between Xxxxxxxxx Sign
Company and Bank of America Illinois (the "BANK")
Ladies and Gentlemen:
The undersigned, Xxxxxxxxx Sign Company (the "COMPANY"), refers to the
Agreement, the terms defined therein being used herein as therein defined, and
hereby gives you notice irrevocably, pursuant to Section 2.4 of the Agreement,
of the [conversion] [continuation] of the Loans specified herein, that:
1. The Conversion/Continuation Date is ____________________, 19__.
2. The aggregate amount of the Loans to be [converted] [continued] is
$____________________.
3. The Loans are to be [converted into] [continued as] [Offshore Rate]
[Base Rate] Loans.
4. [If applicable:] The duration of the Interest Period for the Loans
included in the [conversion] [continuation] shall be [__ months].
XXXXXXXXX SIGN COMPANY
By:
-------------------------------------------------
Title:
----------------------------------------------
B-1
EXHIBIT C
XXXXXXXXX SIGN COMPANY
COMPLIANCE CERTIFICATE
Financial
Statement Date: _____________________, 199_
Reference is made to that certain Credit Agreement dated as of ___________,
199__ (as extended, renewed, amended or restated from time to time, the
"AGREEMENT") between Xxxxxxxxx Sign Company, a Texas corporation (the "COMPANY")
and Bank of America Illinois (the "BANK"). Unless otherwise defined herein,
capitalized terms used herein have the respective meanings assigned to them in
the Credit Agreement.
The undersigned Responsible Officer of the Company, hereby certifies as of
the date hereof that he/she is the __________________ of the Company, and that,
as such, he/she is authorized to execute and deliver this Certificate to the
Bank on the behalf of the Company and its consolidated Subsidiaries, and that:
[USE THE FOLLOWING PARAGRAPH IF THIS CERTIFICATE IS DELIVERED IN CONNECTION WITH
THE FINANCIAL STATEMENTS REQUIRED BY SUBSECTION 6.1(A) OF THE AGREEMENT.]
1. Attached as SCHEDULE 1 hereto are (a) a true and correct copy of the
audited consolidated balance sheet of the Company and its consolidated
Subsidiaries as at the end of the fiscal year ended _______________, 199__ and
(b) the related consolidated statements of income or operations, shareholders'
equity and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, reported on without a
"going concern" or like qualification or exception, or qualification arising out
of the scope of the audit and accompanied by the opinion of _________________ or
another nationally-recognized certified independent public accounting firm (the
"INDEPENDENT AUDITOR") which report shall state that such consolidated financial
statements are complete and correct and have been prepared in accordance with
GAAP, and fairly present, in all material respects, the financial position of
the Company and its consolidated Subsidiaries for the periods indicated and on a
basis consistent with prior periods.
or
[USE THE FOLLOWING PARAGRAPH IF THIS CERTIFICATE IS DELIVERED IN CONNECTION WITH
THE FINANCIAL STATEMENTS REQUIRED BY SUBSECTION 6.1(B) OF THE AGREEMENT.]
1. Attached as SCHEDULE 1 hereto are (a) a true and correct copy of the
unaudited consolidated balance sheet of the Company and its consolidated
Subsidiaries as of the end of the
C-1
fiscal quarter ended __________, 199__, and (b) the related unaudited
consolidated statements of income, shareholders' equity, and cash flows for
the period commencing on the first day and ending on the last day of such
quarter, setting forth in each case in comparative form the figures for the
previous year, and certified by a Responsible Officer that such financial
statements were prepared in accordance with GAAP (subject only to ordinary,
good faith year-end audit adjustments and the absence of footnotes) and
fairly present, in all material respects, the financial position and the
results of operations of the Company and its consolidated Subsidiaries.
2. The undersigned has reviewed and is familiar with the terms of the
Agreement and has made, or has caused to be made under his/her supervision, a
detailed review of the transactions and conditions (financial or otherwise) of
the Company during the accounting period covered by the attached financial
statements.
3. To the best of the undersigned's knowledge, the Company, during such
period, has observed, performed or satisfied all of its covenants and other
agreements, and satisfied every condition in the Credit Agreement to be
observed, performed or satisfied by the Company, and the undersigned has no
knowledge of any Default or Event of Default.
4. The following financial covenant analyses and information set forth on
SCHEDULE 2 attached hereto are true and accurate on and as of the date of this
Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of _______________________, 199__.
XXXXXXXXX SIGN COMPANY
By:
-------------------------------------------------
Title:
----------------------------------------------
C-2
[NOTE: SAMPLE ONLY]
SCHEDULE 2
to the Compliance Certificate
Date: ______________, 199__
For the fiscal quarter/year
ended ______________, 199__
I. TANGIBLE NET WORTH
(a) Book value of all assets of the Company and the $__________
Subsidiaries (other than patents, patent rights,
trademarks, trade names, franchises, copyrights,
goodwill, and similar intangible assets) after all
appropriate deductions (including, without
limitation, reserves for doubtful receivables,
obsolescence, depreciation and amortization),
determined on a consolidated basis in accordance
with GAAP
(b) All Debt (excluding the Deferred Dividend Payable $__________
to Management)
(c) All Subordinated Debt of the Company and the $__________
Subsidiaries which, in accordance with GAAP,
would be required to be presented on their
consolidated balance sheet at such
(d) Tangible Net Worth = The sum of lines (a) and (c) $__________
minus line (b)
(e) Subordinated Debt $__________
(f) Tangible Net Worth plus Subordinated Debt = line $__________
(d) plus line (e), which shall not be less than
the following amounts at the end of each calendar
quarter during each of the following respective
periods:
(i) From December 31, 1996 $ 500,000
C-3
through September 30, 1997
(ii) From December 31, 1997 $ 2,250,000
through September 30, 1998
(iii) From December 31, 1998 and thereafter $ 4,000,000
II. CASH FLOW COVERAGE RATIO
Note: All calculations shall be for the four calendar
quarters then ending
(a) Consolidated net income $__________
(b) Consolidated depreciation $__________
(c) Consolidated amortization $__________
(d) Deferred taxes $__________
[(e) The following one time expenses (net of Federal, $__________
state and local income taxes) relating to the
Reorganization: (i) the fulfillment of net contractual
commitments to senior officers of the Company, (ii)
a financing fee to Xxxxx X. Xxxxxxxx, and (iii)
attorney and accountant fees]
(f) Cash Flow = the sum of lines (a), (b), (c), (d) and $__________
[(e)]
(g) Scheduled principal payments made on the Senior $__________
Debt
(h) Cash Flow Coverage Ratio = The ratio of line (f) to _____to 1.0
line (g), which shall not be less than 1.25 to 1.0
as of the end of each calendar quarter
C-4
III. FIXED CHARGE COVERAGE RATIO
(a) Cash Flow [Line (f) of Section II] $__________
(b) Aggregate principal amount of Indebtedness $__________
scheduled to be paid by the Company during the
immediately preceding four calendar quarters
(c) Capital expenditures for the preceding four calendar $__________
quarters
(d) Fixed Charges = the sum of lines (b) and (c) $__________
(e) Fixed Charge Coverage Ratio = the ratio of line (a) _____to 1.0
to line (d), which shall not be less than 1.0 to 1.0 as
of the end of each calendar quarter
IV. MAXIMUM SENIOR DEBT TO EBITDA RATIO
Note: Calculations for lines (b), (d), (e), (f), (g), [(h)], [(i)] and
[(j)] shall be computed, on the basis of the previous four calendar
quarters
(a) Senior Debt $__________
(b) Net income $__________
[(c) The following one time expenses (net of Federal, $__________
state and local income taxes) relating to the
Reorganization: (i) the fulfillment of net contractual
commitments to senior officers of the Company, (ii)
a financing fee to Xxxxx X. Xxxxxxxx, and (iii)
attorney and accountant fees]
(d) Interest expense $__________
(e) Tax expense $__________
(f) Depreciation expense $__________
(g) Amortization expense $__________
[(h) Losses] $__________
C-5
[(i) Gain from the sale of capital assets other than from $__________
sales of equipment held for lease]
[(j) Loss from the sale of capital assets other than from $__________
sales of equipment held for lease.]
(k) EBITDA = The sum of lines (b), (c), (d), (e), (f), $__________
(g), [(h)] and [(j)] minus line [(i)]
(l) Maximum Senior Debt to EBITDA Ratio = the ratio _____to 1.0
of line (a) to line (k), which as of the end of each
quarter shall not be more than the following
respective ratios:
(i) From December 31, 1996 through 4.25 to 1.0
Xxxxx 00, 0000
(xx) From June 30, 1997 through 4.0 to 1.0
September 30, 1997
(iii) From December 31, 1997 through 3.75 to 1.0
September 30, 1998
(iv) From December 31, 1998 3.5 to 1.0
and thereafter
C-6
EXHIBIT D
FORM OF OPINION OF GUARANTOR'S COUNSEL
October 31, 0000
Xxxx xx Xxxxxxx Xxxxxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Gentlemen:
I am general counsel of Independence Capital Corp. (the "Guarantor") and
have represented the Guarantor in connection with its execution and delivery of
the Guarantee and Contingent Purchase Agreement between the Guarantor and Bank
of America Illinois, dated as of October 31, 1996 (the "Guarantee"), entered
into pursuant to a Subordinated Credit Agreement between Xxxxxxxxx Sign Company
(the "Company") and Bank of America Illinois, dated October 31, 1996 (the "Loan
Agreement"). All capitalized terms used in this opinion without definition
shall have the meanings attributed to them in the Loan Agreement.
I have examined the Guarantee, together with the Loan Agreement and each
other Loan Document evidencing the transaction giving rise to the Guarantee, and
originals or copies certified to my satisfaction of all such corporate records
of the Guarantor and other instruments and certificates of public officials and
officers and representatives of the Guarantor, and have made such other
investigations, reviewed such other documents and considered such questions of
law, as I have deemed necessary or appropriate in connection with the opinions
hereinafter expressed.
Based upon the foregoing, it is my opinion that:
1. The Guarantor is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted.
2. The Guarantor owns 93.75% of the outstanding capital stock of the
Company.
3. The Guarantor has full power to execute the Guarantee and such action
is not in conflict with any provision of law or of the charter or by-laws of the
Guarantor or with any provision of an existing indenture or agreement of the
Guarantor of which counsel has knowledge.
4. All necessary corporate action has been taken to approve or authorize
the execution of the Guarantee.
D-1
Bank of America Illinois
October __, 1996
Page 2
5. The Guarantee is the legal, valid, and binding obligation of the
Guarantor.
I am a member of the Bar of the State of New York and I do not express any
opinions herein concerning any laws other than the corporation laws of the State
of Delaware and the laws of the State of New York. For the purpose of my
opinion in Section 5, I have assumed with your permission that the laws of the
State of Illinois are substantially similar to the laws of the State of New
York.
Very truly yours,
---------------------------------------------
Xxxxx X. Xxxxxx
General Counsel
D-2
SCHEDULE 5.16
MINORITY INTERESTS
None.
SCHEDULE 7.1
PERMITTED LIENS
(1) Lien of Comerica Bank-Texas pursuant to the First Amended and Restated
Revolving Credit and Term Loan Agreement dated as of October 31, 1996
between Xxxxxxxxx Sign Company and Comerica Bank-Texas
*(0) 00-00000000 dated 7/31/92
Secured Party: Integrated Systems Engineering
Collateral: accounts receivable and equipment in the amount of all
outstanding invoices owed to Integrated Systems
Engineering
*(0) 00-00000000 dated 7/19/93
Secured Party: Amoco Oil Company
Collateral: Finished Amoco Oil Company inventory purchased by
Amoco Oil only.
*to be released
D-4
SCHEDULE 7.5
PERMITTED INDEBTEDNESS
First Amended and Restated Revolving Credit and Term Loan Agreement dated as
of October 31, 1996 between Xxxxxxxxx Sign Company and Comerica Bank-Texas.
SCHEDULE 7.8
CONTINGENT OBLIGATIONS
None.
EXHIBIT E
GUARANTEE AND CONTINGENT PURCHASE AGREEMENT
GUARANTEE AND CONTINGENT PURCHASE AGREEMENT, dated as of October 31,
1996, between INDEPENDENCE CAPITAL CORP., a Delaware corporation (the
"Company"), and BANK OF AMERICA ILLINOIS, an Illinois banking corporation
(the "Bank").
Pursuant to a Subordinated Credit Agreement dated as of October 31,
1996 (as modified and supplemented and in effect from time to time, the "LOAN
AGREEMENT") between Xxxxxxxxx Sign Company, a Texas corporation (the
"Borrower") and the Bank, the Bank has agreed, subject to the terms and
conditions of the Loan Agreement, to make a loan to the Borrower for the
purpose of enabling the Borrower to make a distribution to its shareholders,
including the Company. Prior to such distribution, Independence Capital
Group, Inc., a Delaware corporation ("ICG"), had been merged into the
Company. The Company will use the proceeds of such distribution to repay its
outstanding $10,000,000 of indebtedness (the "Existing Debt") under ICG's
credit agreement dated December 30, 1993 with certain financial institutions
and Bank of America Illinois (formerly known as Continental Bank N.A.) as
agent, which the Company assumed as a result of its merger with ICG.
Simultaneously with the execution of this Guarantee, the Bank shall enter
into a Credit Agreement (the "COMPANY CREDIT AGREEMENT") pursuant to which
the Bank may make a loan to the Company to fund its obligations hereunder.
The Company wishes to induce the Bank to make the Loan to the Borrower under
the Loan Agreement in order to provide for the payment of the Existing Debt.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby agrees with
the Bank as follows:
Section 1. DEFINITIONS. Except as expressly provided herein, terms
defined in the Loan Agreement are used herein as defined therein.
Section 2. THE GUARANTEE.
2.1. GUARANTEE. The Company hereby guarantees to the Bank and its
successors and assigns the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the principal of and interest on
the Loan made by the Bank to, and the Note held by the Bank of, the Borrower
and all other amounts from time to time owing to the Bank under the Loan
Agreement and the Note, in each case strictly in accordance with the terms
thereof (such obligations being herein collectively called the "GUARANTEED
OBLIGATIONS"). In addition, the Company hereby further agrees that if the
Borrower shall fail to pay when due (whether at stated maturity, by
acceleration or otherwise) any of the Guaranteed Obligations, the Company
will
E-1
promptly pay the same upon demand, and that in the case of any extension of
time of payment or renewal of any of the Guaranteed Obligations, the same
will be promptly paid in full when due (whether at extended maturity or
otherwise) in accordance with the terms of such extension or renewal.
2.2. OBLIGATIONS UNCONDITIONAL. The obligations of the Company
under Section 2.1 hereof are absolute and unconditional, irrespective of the
value, genuineness, validity, regularity or enforceability of the Loan
Agreement, the Note or any other agreement or instrument referred to herein
or therein, or any substitution, release or exchange of any other guarantee
of or security for any of the Guaranteed Obligations, and, to the fullest
extent permitted by applicable law, irrespective of any other circumstance
whatsoever which might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, it being the intent of this Section 2.2
that the obligations of the Company hereunder shall be absolute and
unconditional under any and all circumstances. Without limiting the
generality of the foregoing, it is agreed that the occurrence of any one or
more of the following shall not affect the liability of the Company hereunder:
(a) at any time or from time to time, without notice to or consent of
the Company, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or compliance
shall be waived;
(b) any of the acts mentioned in any of the provisions of the Loan
Agreement or the Note or any other agreement or instrument referred to
herein or therein shall be done or omitted;
(c) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under the Loan
Agreement or the Note or any other agreement or instrument referred to
herein or therein shall be waived or any other guarantee or any of the
Guaranteed Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with; or
(d) any lien or security interest granted to, or in favor of, the Bank
as security for any of the Guaranteed Obligations shall fail to be
perfected.
The Company hereby expressly waives diligence, presentment, demand of payment
upon the Borrower, protest and all notices whatsoever (other than demand of
payment upon the Company), and any requirement that the Bank exhaust any
right, power or remedy or proceed against the Borrower under the Loan
Agreement or the Note or any other agreement or instrument referred to herein
or therein, or against any other Person under any other guarantee of, or
security for, any of the Guaranteed Obligations.
2.3. REINSTATEMENT. The obligations of the Company under this
Section 2 shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of
E-2
the Borrower in respect of any of the Guaranteed Obligations is rescinded or
must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and the Company agrees that it will indemnify
the Bank on demand for all reasonable costs and expenses (including, without
limitation, fees of counsel) incurred by the Bank in connection with such
rescission or restoration.
2.4. SUBROGATION. The Company hereby agrees that until the payment
and satisfaction in full of all Guaranteed Obligations it shall not exercise
any right or remedy arising by reason of any performance by the Company of
its guarantee in Section 2.1 hereof, whether by subrogation or otherwise,
against the Borrower or any other guarantor of any of the Guaranteed
Obligations or any security for any of the Guaranteed Obligations.
2.5. REMEDIES. The Company agrees that, as between the Company and
the Bank, the obligations of the Borrower under the Loan Agreement and the
Note may be declared to be forthwith due and payable as provided in Section
8.2 of the Loan Agreement for purposes of Section 2.1 hereof, notwithstanding
any stay, injunction or other prohibition preventing such declaration (or
such obligations from becoming automatically due and payable) as against the
Borrower and that, in the event of such declaration (or such obligations
being deemed to have become automatically due and payable) such obligations
(whether or not due and payable by the Borrower) shall forthwith become due
and payable by the Company for purposes of said Section 2.1
2.6. PURCHASE OF NOTE. Without limiting the provisions of Section
2.5 hereof, on any date on which any Event of Default or an "Event of
Default" as defined under the Company Credit Agreement (a "Company Event of
Default") shall have occurred and be continuing, the Company shall, upon
request of the Bank (which request shall be given in a written notice
delivered to the Company at least 5 Business Days prior to the purchase date)
purchase, upon tender to the Company of the Note held by the Bank with an
instrument of assignment attached thereto, the Loan held by the Bank (and
such Note), by payment to the Bank of an amount in immediately available
funds equal to the sum of the principal of and accrued and unpaid interest on
the Loan at the time of such purchase, plus all other amounts owed by the
Borrower under the Loan Agreement, including any amounts which would have
been payable by the Borrower if the Loan had been prepaid by the Borrower on
the date of the purchase hereunder (such amount being herein referred to as
the "PURCHASE PRICE" for such Note). Such tender shall be deemed to be made,
and title to the Note shall be deemed to have passed to the Company, if the
Bank notifies the Company that the Bank is holding the Note for the account
of the Company, whereupon the Company shall become obligated forthwith to pay
such Purchase Price to the Bank. In connection with any legal proceeding
instituted by the Bank to enforce the obligation of the Company to pay the
Purchase Price therefor, the Company hereby waives any defense based upon
adequate remedy at law. The Company hereby expressly waives tender of the
Note in connection with any purchase thereof by the Company required
hereunder as a result of an Event of Default specified in clause (f) or (g)
of Section 8.1 of the Loan Agreement or a Company Event of Default specified
in Section 8.1.9 of the Company Credit Agreement.
E-3
In the event that, as contemplated by Section 8.2 of the Loan
Agreement, the Bank declares the principal amount then outstanding of, and
the accrued interest on, the Loan and all other amounts payable by the
Borrower under the Loan Agreement and the Note to be due and payable (or in
the event that such principal amount and accrued interest and other amounts
shall become automatically due and payable as provided in said Section 8.2)
and the Bank makes demand upon the Company pursuant to this Agreement for
payment of the same, the Company may, at its option, perform its obligation
to pay the same hereunder either by making payment of such amount on behalf
of the Borrower to the Bank hereunder or by purchasing the Note held by the
Bank, such purchase to be effected by payment to the Bank of the Purchase
Price therefor; in such event, the Bank shall, as soon as practicable
following such payment by the Company hereunder, deliver, with an instrument
of assignment attached thereto, the Note held by the Bank.
Any purchase under this Section 2.6 shall be made by the Company
from the Bank without recourse and without representation or warranty of any
kind whatsoever (except as to the right of the Bank to transfer valid title
to the Note free of any Lien). Following any such purchase, the Company
shall remain obligated under this Section 2 in respect of its guarantee of
any other amounts owing by the Borrower under the Loan Agreement which may
remain unpaid at the time.
2.7. SALE OF NOTE. Without limiting the provisions of Sections 2.5
and 2.6 hereof, on any date on which any Event of Default or Default shall
have occurred and be continuing, the Bank shall, upon request of the Company
(which request shall be given in a written notice delivered to the Bank at
least five Business Days prior to the sale date) sell, upon tender by the
Company of an amount in immediately available funds equal to the sum of the
principal of and accrued and unpaid interest on the Loan at the time of such
sale, plus all other amounts owed by the Borrower under the Loan Agreement,
including any amounts which would have been payable by the Borrower if the
Loan had been prepaid by the Borrower on the date of the sale hereunder.
Such sale shall be accomplished by the delivery of an instrument of
assignment with the attached Note.
Any sale under this Section 2.7 shall be made by the Bank to the
Company without recourse and without representation or warranty of any kind
whatsoever (except as to the right of the Bank to transfer valid title to the
Note free of any Lien). Following any such sale, the Company shall remain
obligated under this Section 2 in respect of its guarantee of any other
amounts owing by the Borrower under the Loan Agreement which may remain
unpaid at the time.
2.8. CONTINUING GUARANTEE. The guarantee in this Section 2 is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
Section 3. MISCELLANEOUS.
3.1. WAIVER. No failure on the part of the Bank to exercise and no
delay in exercising, and no course of dealing with respect to, any right,
power or privilege under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any right,
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power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
3.2. AMENDMENTS, ETC. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be modified or waived
only by a written instrument signed by the Company and the Bank, and any
provision of this Agreement may be waived by the Bank.
3.3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and the successors and assigns
of the Company, and to the successors and assigns of the Bank and each
subsequent holder of the Guaranteed Obligations (provided, however, that the
Company shall not assign its obligations hereunder without the prior written
consent of the Bank).
3.4. CAPTIONS. The captions and section headings appearing herein
are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
3.5. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and either of the parties hereto may execute this Agreement by
signing any such counterpart.
3.6. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of Illinois.
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IN WITNESS WHEREOF, the parties hereto have caused this Guarantee
and Contingent Purchase Agreement to be duly executed as of the day and year
first above written.
INDEPENDENCE CAPITAL CORP.
By
------------------------------------
Title: President
Address for Notices
Independence Capital Corp.
00 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopier No.: 000-000-0000
Telephone No.:
Attention: Xxxxxx X. Xxxxx
BANK OF AMERICA ILLINOIS
By
----------------------------------
Title: Senior Vice President
Address for Notices
Bank of America Illinois
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopier No.: 000-000-0000
Telephone No.:
Attention: Xxxx Xxxx
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EXHIBIT F
U.S. $10,000,000
CREDIT AGREEMENT,
dated as of October 31, 1996
between
INDEPENDENCE CAPITAL CORP.
as the Borrower,
and
BANK OF AMERICA ILLINOIS, as the Lender.
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of October 31, 1996, between INDEPENDENCE
CAPITAL CORP., a Delaware corporation (the "BORROWER") and BANK OF AMERICA
ILLINOIS (the "LENDER").
W I T N E S S E T H:
WHEREAS, Independence Capital Group, Inc. ("ICG") has $10,000,000 of
outstanding indebtedness to the Bank pursuant to the Credit Agreement (the
"Existing Credit Agreement") dated as of December 30, 1993 among ICG, certain
financial institutions and Bank of America Illinois (then known as Continental
Bank N.A.), as agent;
WHEREAS, ICG has been merged with and into the Borrower;
WHEREAS, concurrently herewith Xxxxxxxxx Sign Company ("ZSC") has
outstanding $10,000,000 borrowed from the Bank pursuant to a Credit Agreement
dated the date hereof, the proceeds of which loan shall be paid as a dividend to
the Borrower concurrently herewith;
WHEREAS, it is a condition to the Lender's agreement to lend to ZSC that
the Borrower enter into this Credit Agreement and the Guarantee and Contingent
Purchase Agreement dated the date hereof; and
WHEREAS, the Borrower shall apply the proceeds of such dividend to repay
the indebtedness under the Existing Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. DEFINED TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"AFFILIATE" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or
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any committee with responsibility for administering, any Plan). A Person
shall be deemed to be "controlled by" any other Person if such other Person
possesses, directly or indirectly, power
(a) to vote 10% or more of the securities or interests (on a fully
diluted basis) having ordinary voting power for the election of directors
or managing general partners; or
(b) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise,
or the ownership, direct or indirect or beneficial, of 10% or more of any class
of stock or other ownership interest of such Person.
"AGREEMENT" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"ALTERNATE BASE RATE" means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate, which means, for any day, the rate
set forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, "H.15(519)") on the preceding Business Day
opposite the caption "Federal Funds (Effective)"; or, if for any relevant day
such rate is not so published on any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the Bank of the rates for
the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Bank; and (b) the rate of interest
in effect for such day as publicly announced from time to time by BofA in San
Francisco, California, as its "reference rate." (The "reference rate" is a rate
set by BofA based upon various factors including BofA's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.) Any change in the reference rate announced by BofA shall
take effect at the opening of business on the day specified in the public
announcement of such change.
"AUTHORIZED OFFICER" means, relative to any Obligor, those of its officers
whose signatures and incumbency shall have been certified to the Lender pursuant
to SECTION 5.1.1.
"AVAILABLE INVESTMENT AMOUNT" means (i) the sum of (A) 50% of the amount of
dividends that would have been permitted to be paid by Madison under applicable
law after September 30, 1996 plus (B) 50% of interest paid after September 30,
1996 under the Surplus Debentures to IFSC plus (C) 50% of payments received by
the Borrower from Madison and its Subsidiaries in respect of tax liabilities
after September 30, 1996 minus (ii) the sum of (A) Investments made by IFSC as
permitted pursuant to the proviso set forth in Section 7.2.1(b) (ii) plus
(B)Investments made by the Borrower as permitted pursuant to the proviso set
forth in Section 7.2.5 plus (C) amounts applied as permitted pursuant to the
proviso set forth in Section 7.2.6; PROVIDED, that the
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sum of the amounts set forth in clauses (ii)(A) and (B) shall be reduced by
$5,000,000 but not to an amount less than zero; and PROVIDED, further, on and
after the making of any Loan hereunder, the Available Investment Amount shall
be reduced to zero.
"BASE RATE LOAN" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"BofA" means Bank of America National Trust and Savings Association, a
national banking association.
"BORROWER" is defined in the PREAMBLE.
"BORROWING REQUEST" means a loan request and certificate duly executed by
an Authorized Officer of the Borrower, substantially in the form of EXHIBIT B
hereto.
"BUSINESS DAY" means
(a) any day which is neither a Saturday or Sunday nor a legal holiday
on which banks are authorized or required to be closed in Chicago,
Illinois; and
(b) relative to the making, continuing, prepaying or repaying of any
Eurodollar Rate Loans, including with respect to the giving of notices
required under this Agreement therefor, any day described in the preceding
CLAUSE (a) which is also a day on which dealings in Dollars are carried on
in the London interbank market.
"CAPITAL EXPENDITURES" means, for any period, the sum of
(a) the aggregate amount of all expenditures of the Borrower and its
Subsidiaries for fixed or capital assets made during such period which, in
accordance with GAAP, would be classified as capital expenditures; and
(b) the aggregate amount of all Capitalized Lease Liabilities
incurred during such period.
"CAPITALIZED LEASE LIABILITIES" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
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"CASH EQUIVALENT INVESTMENT" means, at any time:
(a) any evidence of Indebtedness issued or guaranteed by the United
States Government (including, but not limited to, securities issued by the
Government National Mortgage Association);
(b) commercial paper, maturing not more than nine months from the
date of issue, which is issued by
(i) a corporation (other than an Affiliate of the Borrower)
organized under the laws of any state of the United States or of the
District of Columbia and rated A-1 by Standard & Poor's Corporation or
P-1 by Xxxxx'x Investors Service, Inc., or
(ii) the Lender (or its holding company);
(c) any certificate of deposit or bankers acceptance, maturing not
more than one year after such time, which is issued by either
(i) a commercial banking institution that is a member of the
Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500,000,000, or
(ii) the Lender; or
(d) any repurchase agreement entered into with the Lender, any other
commercial banking institution of the stature referred to in CLAUSE (c)(i)
or any investment banking firm or broker which (directly or through a
parent or subsidiary corporation) issues commercial paper maturing not more
than nine months from the date of issue with a rating of at least A-1 by
Standard & Poor's Corporation or P-1 by Xxxxx'x Investors Service, Inc.,
which repurchase agreement
(i) is secured by a fully perfected security interest in any
obligation of the type described in any of CLAUSES (a) through (c),
and
(ii) has a market value at the time such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of the
Lender (or such other commercial banking institution) thereunder.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
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"CHANGE IN CONTROL" means the failure of Independence to own and control,
directly and free and clear of all Liens, options or other encumbrances or
rights, at least 95% of the outstanding shares of capital stock having ordinary
voting power for the election of directors of the Borrower on a fully diluted
basis.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COMMITMENT" means the Lender's obligation to make the Loan pursuant to
SECTION 2.1.1.
"COMMITMENT AMOUNT" means, on any date on or prior to the Commitment
Termination Date, $10,000,000.
"COMMITMENT TERMINATION DATE" means the earliest of
(a) October 31, 2001;
(b) immediately after the making of Loans on the Effective Date; and
(c) the date of any termination of the Commitments pursuant to
SECTION 8.2 or 8.3.
Upon the occurrence of any event described in CLAUSES (a), (b) or (c), the
Commitments shall terminate automatically and without any further action.
"CONSOLIDATED CASH SOURCES" means, at any time during a particular Fiscal
Year, the sum of (a) the maximum amount of dividends available to be paid by
Madison during such Fiscal Year, plus (b) the amount of interest available to be
paid on the Surplus Debentures during such Fiscal Year, plus (c) Madison's good
faith reasonable estimate of the amount of tax sharing payments available to be
paid by Madison and its Subsidiaries to Independence pursuant to the Tax Sharing
Agreements during such Fiscal Year, PLUS (d) the amount of management fees
available to be paid to the Borrower by its Subsidiaries during such Fiscal
Year, in the case of CLAUSE (a), based on the Statutory Financial Statements
filed by Madison for the immediately preceding Fiscal Year and otherwise as
computed in accordance with SAP and, in the case of CLAUSE (c), as computed in
accordance with SAP.
"CONSOLIDATED FIXED CHARGE RATIO" means, as of the close of any Fiscal
Quarter, but determined prospectively for the balance of the then current Fiscal
Year (or, in the case of a Fiscal Year end, for the next Fiscal Year), the ratio
of Consolidated Cash Sources to Consolidated Fixed Charges for the balance of
the then current Fiscal Year (or in the case of a Fiscal Year end, for the next
Fiscal Year).
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum of
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(a) Consolidated Interest Expense of the Borrower and its
Subsidiaries for such period;
plus
(b) amounts required to be paid on Indebtedness (including amounts
paid pursuant to CLAUSE (b) of SECTION 3.1) and any regularly scheduled
payment with respect to Capitalized Lease Liabilities allocable to
principal, in each case by the Borrower and its Subsidiaries for such
period.
"CONSOLIDATED INTEREST EXPENSE" means, for any Fiscal Quarter, the
aggregate interest expense of the Borrower and its Subsidiaries for such Fiscal
Quarter, as determined in accordance with GAAP consistently applied, including,
without limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and banker's acceptances and net costs under
interest rate swap or exchange agreements and the portion of any obligation
under capital leases allocable to interest expense; PROVIDED that for purposes
of determining Consolidated Interest Expense for periods occurring after the
date of determination, it shall be assumed that the rate of interest on the Loan
is equal to the Eurodollar Rate for an Interest Period of 3 months as of the
date of determination.
"CONSOLIDATED TANGIBLE NET WORTH" of a Person and its Subsidiaries means,
at any time, all amounts which, in accordance with GAAP consistently applied,
would be included under shareholders' equity on a consolidated balance sheet of
such Person and each of its Subsidiaries at such time; PROVIDED that, in any
event, such amounts are to be net of amounts carried on the books of such Person
and each of its Subsidiaries for (a) any write-up in the book value of any
assets of such Person and any of its Subsidiaries resulting from a revaluation
thereof subsequent to December 31, 1992, (b) treasury stock, (c) unamortized
debt discount and expense, and (d) goodwill and other intangibles and, provided;
further, no effect shall be given to Statement of Financial Accounting Standards
No. 115 in such calculation.
"CONTINGENT LIABILITY" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other
Person. The amount of any Person's obligation under any Contingent Liability
shall (subject to any limitation set forth therein) be deemed to be the
outstanding principal amount (or maximum principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
"CONTINUATION/CONVERSION NOTICE" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of EXHIBIT C hereto.
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"CONTRIBUTION AGREEMENT" means the letter agreement among Independence, the
Borrower and the Lender, dated as of the Effective Date, relating to the
contribution of certain amounts from time to time by Independence to the
Borrower, substantially in the form of EXHIBIT H hereto, as amended or otherwise
modified in accordance with and subject to the provisions of SECTION 7.2.19
hereof.
"CONTROLLED GROUP" means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414(b) or 414(c) of the Code or
Section 4001 of ERISA.
"DEFAULT" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"DEPARTMENT" means the Insurance Department of the State of Wisconsin.
"DEPARTMENT-DELAWARE" means the Insurance Department of the State of
Delaware.
"DEPARTMENT-NY" means the Insurance Department of the State of New York.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto as
SCHEDULE I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Lender.
"DOLLAR" and the sign "$" mean lawful money of the United States.
"DOMESTIC OFFICE" means the office of the Lender designated as such below
its signature hereto or such other office of the Lender within the United States
as may be designated from time to time by notice from the Lender to the
Borrower.
"EFFECTIVE DATE" means the date this Agreement becomes effective pursuant
to SECTION 5.1.
"ENVIRONMENTAL LAWS" means all applicable federal, state or local statutes,
laws, ordinances, codes, rules, regulations and guidelines (including consent
decrees and administrative orders) relating to public health and safety and
protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"EURODOLLAR OFFICE" means the office of the Lender designated as such below
its signature hereto or such other office of the Lender as designated from time
to time by notice from the Lender to Borrower, whether or not outside the United
States, which shall be making or maintaining Eurodollar Rate Loans of the Lender
hereunder.
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"EURODOLLAR RATE" is defined in SECTION 3.2.1.
"EURODOLLAR RATE LOAN" means a Loan bearing interest, at all times during
an Interest Period applicable to such Loan, at a fixed rate of interest
determined by reference to the Eurodollar Rate (Reserve Adjusted).
"EURODOLLAR RATE (RESERVE ADJUSTED)" is defined in SECTION 3.2.1.
"EURODOLLAR RESERVE PERCENTAGE" is defined in SECTION 3.2.1.
"EVENT OF DEFAULT" is defined in SECTION 8.1.
"EXISTING CREDIT AGREEMENT" is defined in the recitals.
"FIRST STANDARD" means First Standard Security Insurance Company, a
Delaware corporation which as of the Effective Date is a wholly-owned indirect
Subsidiary of Standard.
"FISCAL QUARTER" means any quarter of a Fiscal Year.
"FISCAL YEAR" means any period of twelve consecutive calendar months ending
on December 31; references to a Fiscal Year with a number corresponding to any
calendar year (E.G. the "1996 Fiscal Year") refer to the Fiscal Year ending on
the December 31 occurring during such calendar year.
"F.R.S. BOARD" means the Board of Governors of the Federal Reserve System
or any successor thereto.
"GAAP" is defined in SECTION 1.4.
"GUARANTEE" means the Guarantee and Contingent Purchase Agreement of the
Borrower in the form attached as Exhibit G.
"HAZARDOUS MATERIAL" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation
and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any other applicable
federal, state or local law, regulation, ordinance or requirement
(including consent decrees and administrative orders)
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relating to or imposing liability or standards of conduct concerning any
hazardous, toxic or dangerous waste, substance or material, all as amended
or hereafter amended.
"HEDGING OBLIGATIONS" means, with respect to any Person, all liabilities of
such Person under interest rate swap agreements, interest rate cap agreements
and interest rate collar agreements, and all other agreements or arrangements
designed to protect such Person against fluctuations in interest rates or
currency exchange rates.
"HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Loan Document.
"ICG" is defined in the recitals.
"IFSC" means Independence Financial Services Corp., a Delaware corporation.
"IMPERMISSIBLE QUALIFICATION" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of the Borrower, any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item in
such financial statement and which, as a condition to its removal, would
require an adjustment to such item the effect of which would be to cause
the Borrower to be in default of any of its obligations under SECTION
7.2.4.
"INCLUDING" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of EJUSDEM GENERIS
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"INDEBTEDNESS" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
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(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which have
been or should be, in accordance with GAAP, recorded as Capitalized Lease
Liabilities;
(d) all other items which, in accordance with GAAP, would be included
as liabilities on the liability side of the balance sheet of such Person as
of the date at which Indebtedness is to be determined;
(e) net liabilities of such Person under all Hedging Obligations;
(f) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price of
property or services, and indebtedness (excluding prepaid interest thereon)
secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse; and
(g) all Contingent Liabilities of such Person in respect of any of
the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer.
"INDEMNIFIED LIABILITIES" is defined in SECTION 10.4.
"INDEMNIFIED PARTIES" is defined in SECTION 10.4.
"INDEPENDENCE" means Independence Holding Company, a Delaware corporation.
"INSIGNIFICANT SUBSIDIARY" means any Subsidiary of the Borrower which is
not a Significant Subsidiary.
"INTEREST PERIOD" means, relative to any Eurodollar Rate Loan, the period
beginning on (and including) the date on which such Eurodollar Rate Loan is made
or continued as, or converted into, a Eurodollar Rate Loan pursuant to SECTION
2.2 or 2.3 and ending on (but excluding) the day which numerically corresponds
to such date one, three or, if available (as determined in the sole discretion
of the Lender), six or twelve months thereafter (or, if such month has no
numerically corresponding day, on the last Business Day of such month), as the
Borrower may select in its relevant notice pursuant to SECTION 2.2 or 2.3;
PROVIDED, HOWEVER, that
(a) the Borrower shall not be permitted to select Interest Periods to
be in effect at any one time which have expiration dates occurring on more
than five different dates;
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(b) Interest Periods commencing on the same date for Loans shall be
of the same duration;
(c) if such Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall end on the next following
Business Day unless such next following Business Day is the first Business
Day of a calendar month, in which case such Interest Period shall end on
the Business Day next preceding such numerically corresponding day; and
(d) no Interest Period may end later than the Stated Maturity Date.
"INVESTMENT" means, relative to any Person,
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business);
(b) any Contingent Liability of such Person; and
(c) any ownership or similar interest held by such Person in any
other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"INVESTMENT GRADE INVESTMENT" means, relative to any Person, any Investment
by such Person in
(a) Cash Equivalent Investments;
(b) preferred stock rated A or better by Standard & Poor's
Corporation or rated A2 or better by Xxxxx'x Investors Service, Inc.;
(c) fixed-income securities which are rated BBB- or better by
Standard & Poor's Corporation or rated Baa3 or better by Xxxxx'x Investors
Service, Inc.; or
(d) preferred stock having mandatory sinking fund provisions and
rated BBB or better by Standard & Poor's Corporation or rated Baa2 or
better by Xxxxx'x Investors Service, Inc.;
PROVIDED, HOWEVER, that, in any event, any Investment of the type referred to in
CLAUSES (b), (c) or (d) above which is rated by both Standard & Poor's
Corporation and Moody's Investors
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Service, Inc. must have the ratings from both such rating agencies set forth
in such CLAUSE (b), (c) or (d) in order to qualify as an "Investment Grade
Investment".
"LENDER" is defined in the PREAMBLE.
"LIEN" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"LOAN" is defined in SECTION 2.1.1.
"LOAN DOCUMENTS" means this Agreement, the Note, the Pledge Agreements, the
Fee Letter, the Contribution Agreement and any other document executed in
connection or pursuant hereto or thereto from time to time which sets forth that
it constitutes a "Loan Document", in each case as amended, supplemented, amended
and restated or otherwise modified from time to time.
"MADISON" means Madison National Life Insurance Company, Inc.
"MADISON CONSOLIDATED STATUTORY SURPLUS" means, at any time, an amount
equal to Madison Statutory Surplus PLUS the value of the stock of Standard
carried on the books of Madison in accordance with SAP.
"MADISON RESTRICTED INVESTMENTS" is defined in Section 7.2.4(b).
"MADISON STATUTORY SURPLUS" means, at any time, the excess of
(a) the sum of "common capital stock", "preferred capital stock",
"gross paid-in and contributed surplus" and "unassigned funds (surplus)",
PLUS the aggregate write-ins for "special surplus funds" and for "other
than special surplus funds", PLUS Madison's "asset valuation reserve"
OVER
(b) "treasury stock" PLUS the value of the stock of Standard as
carried in the books of Madison in accordance with SAP,
of Madison on a stand-alone basis at such time, all as classified and valued in
accordance with applicable Statutory Requirements plus any inclusions (and minus
any exclusions) promulgated from time to time under Statutory Requirements to
enhance, replace or otherwise modify any of the foregoing classes of inclusions.
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"MATERIALLY ADVERSE EFFECT" means, relative to any occurrence of whatever
nature (including, without limitation, any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), a
materially adverse effect on:
(a) the consolidated business, assets, revenues, financial condition,
operations, or prospects of the Borrower and its Subsidiaries; or
(b) the ability of the Borrower to perform any of its payment or
other material obligations under this Agreement, the Note, Pledge Agreement
I or any other Loan Document.
"NAIC" means the National Association of Insurance Commissioners.
"NON-INVESTMENT GRADE INVESTMENTS" means, relative to any Person, any
Investment by such Person which does not comprise an Investment Grade Investment
and shall include, in any event, any common equity securities and all real
estate; PROVIDED that, (a) any Investment which falls within more than one of
the categories listed above shall only be counted once and (b) if an Investment
in a particular type of Person falls within one of the categories listed above
so that it counts as a "Non-Investment Grade Investment", the further Investment
by such Person of the proceeds of such Investment in Investments which would
otherwise constitute "Non-Investment Grade Investments" shall not count for
purposes of this definition.
"NOTE" means a promissory note of the Borrower payable to the Lender,
executed and delivered by the Borrower in accordance with this Agreement,
substantially in the form of EXHIBIT A hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to the Lender resulting from outstanding
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"OBLIGATIONS" means all obligations (monetary or otherwise) of the Borrower
and each other Obligor arising under or in connection with this Agreement, the
Note, the Pledge Agreements and each other Loan Document.
"OBLIGOR" means the Borrower or any other Person (other than the Lender)
obligated under any Loan Document.
"ORGANIC DOCUMENT" means, relative to any Obligor, its certificate of
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements applicable to any of its authorized shares of capital
stock.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
F-14
"PENSION PLAN" means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer
plan as defined in section 4001(a)(3) of ERISA), and to which the Borrower or
any corporation, trade or business that is, along with the Borrower, a member of
a Controlled Group, may have liability, including any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under section 4069 of ERISA.
"PERSON" means any natural person, corporation, firm, association,
government, governmental agency or any other entity, whether acting in an
individual, fiduciary or other capacity.
"PLAN" means any Pension Plan or Welfare Plan.
"PLEDGE AGREEMENT I" means the Pledge Agreement, to be executed and
delivered by the Borrower pursuant to SECTION 5.1.6, substantially in the form
of EXHIBIT D hereto, as amended, supplemented, amended and restated or otherwise
modified from time to time.
"PLEDGE AGREEMENT II" means the Pledge Agreement, to be executed and
delivered by IFSC pursuant to SECTION 5.1.6, substantially in the form of
EXHIBIT E hereto, as amended, supplemented, amended and restated on otherwise
modified from time to time.
"PLEDGE AGREEMENTS" shall be the collective reference to Pledge Agreement I
and Pledge Agreement II.
"QUARTERLY PAYMENT DATE" means the last day of each June, September,
December and March or, if any such day is not a Business Day, the last preceding
Business Day.
"RELEASE" means a "release", as such term is defined in CERCLA.
"RESOURCE CONSERVATION AND RECOVERY ACT" means the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, ET SEQ., as in effect from time to
time.
"RISK BASED CAPITAL RATIO" means, at any time, the consolidated risk based
capital ratio, determined in accordance with the risk based capital guidelines
of the NAIC, and shall be expressed as a percentage of the "Company Action
Level" as defined therein, PROVIDED that the ratio which is defined to be the
"Company Action Level" shall, for purposes of this definition, be 100%.
"SAP" means the statutory accounting practices for life insurance companies
as prescribed from time to time by, in the case of Madison, the Department and,
in the case of Standard, the Department-NY.
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"SEMI-ANNUAL PAYMENT DATE" means the last day of each June and December or,
if such day is not a Business Day, the last preceding Business Day.
"SIGNIFICANT SUBSIDIARY" means (a) (i) IFSC, (ii) Madison, (iii) Standard
and (iv) any other Subsidiary of the Borrower which would qualify as a
"significant subsidiary" under Section 210.1-02(u) of Regulation S-X (17 CFR
Part 210) of the Securities and Exchange Commission as such regulation is in
effect on the date hereof or which has a Consolidated Tangible Net Worth of
$2,000,000 or more, and (b) when used in SECTION 8.1.9, any two or more
Insignificant Subsidiaries in respect of which any event or action of the nature
referred to in SECTION 8.1.9 has occurred or has been taken and as to which
Consolidated Tangible Net Worth exceeds, in the aggregate, $2,000,000.
"STANDARD" means Standard Security Life Insurance Company of New York, a
New York corporation.
"STANDARD RESTRICTED INVESTMENTS" is defined in Section 7.2.4(f).
"STANDARD STATUTORY SURPLUS" means the excess of
(a) the sum of "common capital stock", "preferred capital stock",
"gross paid-in and contributed surplus" and "unassigned funds (surplus)",
PLUS the aggregate write-ins for "special surplus funds" and for "other
than special surplus funds", PLUS "unassigned funds", PLUS Standard's
"asset valuation reserve"
OVER
(b) "treasury stock",
of Standard on a stand alone basis, all as classified and valued in accordance
with applicable Statutory Requirements plus any inclusions (and minus any
exclusions) promulgated from time to time under Statutory Requirements to
enhance, replace or otherwise modify any of the foregoing classes of inclusions.
"STATED MATURITY DATE" means October 31, 2001.
"STATUTORY FINANCIAL STATEMENTS" means financial statements prepared in
accordance with SAP and suitable for filing with, and covering in scope items
required or requested by, in the case of Madison, the Department or, in the case
of Standard, the Department-NY.
"STATUTORY REQUIREMENTS" means, relative to
(a) consolidated Statutory Financial Statements of Madison and its
Subsidiaries prepared for filing with the Department, the accounting
F-16
practices of the NAIC as prescribed or permitted by the Department as
complied with in connection with the preparation of the 1995 Madison
Consolidated Statutory Report,
(b) stand-alone Statutory Financial Statements of Madison prepared
for filing with the Department, the accounting practices of the NAIC as
prescribed or permitted by the Department as complied with in connection
with the preparation of its 1995 Madison Consolidated Statutory Report, and
(c) consolidated Statutory Financial Statements of Standard and its
Subsidiaries prepared for filing with the Department-NY, the accounting
practices of the NAIC as prescribed or permitted by the Department as
complied with in connection with the preparation of its 1995 Standard
Stand-Alone Statutory Report,
together, in each case, with all modifications and changes from time to time
promulgated thereto which shall become mandatory upon, or be adopted by, such
reporting company.
"SUBORDINATED NOTE" means the subordinated grid promissory note in the
maximum aggregate principal amount of $362,500, payable by the Borrower to
Independence Holding Company dated December 30, 1993, as the same may be
modified in accordance with and subject to the provisions of SECTION 7.2.19
hereof.
"SUBSIDIARY" means, with respect to any Person, any corporation of which
more than 50% of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person; provided, however that ZSC shall not be
deemed a Subsidiary of the Borrower.
"SURPLUS DEBENTURES" means the Amended and Restated Contribution Note,
dated October 30, 1996, payable by Madison to IFSC in the principal amount of
$15,000,000, the Amended and Restated Contribution Note, dated October 30, 1996,
payable by Madison to IFSC in the principal amount of $5,000,000 and the
Contribution Note, dated October 31, 1996, payable by Madison to IFSC in the
principal amount of $5,000,000, all of which have been pledged to the Lender
pursuant to Pledge Agreement II.
"SURPLUS RELIEF REINSURANCE AGREEMENT" means any agreement whereby the
Borrower or any of its Subsidiaries (including Madison, Standard or any
Subsidiaries of Madison or Standard) assumes or cedes business under a finite
risk reinsurance agreement or a reinsurance agreement that would be considered a
"financing-type" reinsurance agreement, as determined in the Fourth Edition of
the AICPA Audit Guide for Stock Life Insurance Companies on pp. 91-92 thereof,
as the same may be revised from time to time.
F-17
"TAX SHARING AGREEMENTS" means, collectively, the Tax Allocation Agreement,
dated July 30, 1993, between Independence and Standard and the Tax Allocation
Agreement, dated July 30, 1993, between Madison and Independence.
"TAXES" is defined in SECTION 4.6.
"TYPE" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a Eurodollar Rate Loan.
"UNITED STATES" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"WELFARE PLAN" means a "welfare plan", as such term is defined in section
3(1) of ERISA.
"ZSC" is defined in the recitals.
"ZSC CREDIT AGREEMENT" means the Subordinated Credit Agreement between ZSC
and the Lender dated the date hereof.
SECTION 1.2. USE OF DEFINED TERMS. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and the
Pledge Agreements and in the Note, Borrowing Request, Continuation/Conversion
Notice, Loan Document, notice and other communication delivered from time to
time in connection with this Agreement or any other Loan Document.
SECTION 1.3. CROSS-REFERENCES. Unless otherwise specified, references in
this Agreement, the Pledge Agreements and in each other Loan Document to any
Article or Section are references to such Article or Section of this Agreement,
the applicable Pledge Agreement or such other Loan Document, as the case may be,
and, unless otherwise specified, references in any Article, Section or
definition to any clause are references to such clause of such Article, Section
or definition.
SECTION 1.4. ACCOUNTING AND FINANCIAL DETERMINATIONS. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 7.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those generally accepted accounting principles ("GAAP") applied
in the preparation of the financial statements referred to in CLAUSE (a) of
SECTION 6.5 or, as to the delivery of Statutory Financial Statements, SAP.
F-18
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTE
SECTION 2.1. COMMITMENTS. On the terms and subject to the conditions of
this Agreement (including ARTICLE V) on a single occasion on or prior to the
Commitment Termination Date, the Lender will make a term loan the "LOAN") to the
Borrower in a principal amount not to exceed the Commitment Amount. The
commitment of the Lender described in this SECTION 2.1.1 is herein referred to
as its "COMMITMENT". The Lender shall make one Loan under this Agreement,
although such Loan may be continued or converted in parts i.e., as multiple
Loans hereunder, subject to the terms hereof. No amounts paid or prepaid with
respect to the Loan may be reborrowed.
SECTION 2.2. BORROWING PROCEDURE. By delivering a Borrowing Request to
the Lender on or before 10:00 a.m., Chicago, Illinois time, on a Business Day
not less than one Business Day prior to the Effective Date, the Borrower may
request that the Loan be made in an amount not to exceed the Commitment Amount.
On the terms and subject to the conditions of this Agreement, the borrowing
shall be comprised of the type of Loans specified in the Borrowing Request and
shall be made on the Effective Date. On or before 10:00 a.m. Chicago, Illinois
time, the Lender shall make such funds available to the Borrower by wire
transfer to the account the Borrower shall have specified in the Borrowing
Request.
SECTION 2.3. CONTINUATION AND CONVERSION ELECTIONS. By delivering a
Continuation/Conversion Notice to the Lender on or before 10:00 a.m., Chicago,
Illinois time, on a Business Day, the Borrower may from time to time irrevocably
elect, on not less than three nor more than five Business Days' notice, that
all, or any portion in an aggregate minimum amount of $1,000,000 and an integral
multiple of $500,000, of the Loan be, in the case of Base Rate Loans, converted
into Eurodollar Rate Loans or, in the case of Eurodollar Rate Loans, be
converted into a Base Rate Loan or continued as Eurodollar Rate Loans (in the
absence of delivery of a Continuation/Conversion Notice with respect to any
Eurodollar Rate Loan at least three Business Days before the last day of the
then current Interest Period with respect thereto, such Eurodollar Rate Loan
shall, on such last day, automatically convert to a Base Rate Loan); PROVIDED,
HOWEVER, that no portion of the outstanding principal amount of any Loan may be
continued as, or be converted into, Eurodollar Rate Loans when any Default has
occurred and is continuing.
SECTION 2.4. FUNDING. The Lender may, if it so elects, fulfill its
obligation to make, continue or convert Eurodollar Rate Loans hereunder by
causing one of its foreign branches or Affiliates (or an international banking
facility created by the Lender) to make or maintain such Eurodollar Rate Loan;
PROVIDED, HOWEVER, that such Eurodollar Rate Loan shall nonetheless be deemed to
have been made and to be held by the Lender, and the obligation of the Borrower
to repay such Eurodollar Rate Loan shall nevertheless be to the Lender for the
account of such foreign branch, Affiliate or international banking facility. In
addition, the Borrower hereby consents and agrees that, for purposes of any
determination to be made for purposes of SECTION 4.1, 4.2, 4.3 or 4.4, it shall
be conclusively assumed that the Lender elected to fund all
F-19
Eurodollar Rate Loans by purchasing, as the case may be, Dollar certificates
of deposit in the U.S. or Dollar deposits in its Eurodollar Office's
interbank eurodollar market.
SECTION 2.5. NOTE. The Loan shall be evidenced by a Note payable to the
order of the Lender in a maximum principal amount equal to the Commitment
Amount. The Borrower hereby irrevocably authorizes the Lender to make (or cause
to be made) appropriate notations on the grid attached to the Note (or on any
continuation of such grid), which notations, if made, shall evidence, INTER
ALIA, the date of, the outstanding principal of, and the interest rate and
Interest Period applicable to the Loan evidenced thereby. Such notations shall
be conclusive and binding on the Borrower absent manifest error; PROVIDED,
HOWEVER, that the failure of the Lender to make any such notations shall not
limit or otherwise affect any Obligations of the Borrower.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. REPAYMENTS AND PREPAYMENTS. On the Stated Maturity Date, the
Borrower shall repay in full the entire unpaid principal amount of the
outstanding Loan, together with all accrued and unpaid interest thereon, all
fees in connection therewith and all other Obligations hereunder. Prior
thereto, the Borrower
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of any
Loans; PROVIDED, HOWEVER, that
(i) no such prepayment of any Eurodollar Rate Loan may be made on
any day other than the last day of the Interest Period for such Loan,
(ii) all such voluntary prepayments shall require at least three
but no more than five Business Days' prior written notice to the
Lender, and
(iii) all such voluntary partial prepayments shall be in an
aggregate minimum amount of $100,000 and an integral multiple of
$50,000 in excess thereof; and
(b) shall, immediately upon any acceleration of the Stated Maturity
Date of all or any portion of the Loan pursuant to SECTION 8.2 or SECTION
8.3, repay all or such portion of the Loan so accelerated.
F-20
Each prepayment of the Loan shall be applied first to any Base Rate Loans
outstanding prior to being applied to any Eurodollar Rate Loans outstanding.
Each prepayment of any portion of the Loan made pursuant to this Section shall
be without premium or penalty, except as may be required by SECTION 4.4. Once
repaid or prepaid, that portion of the repaid or prepaid Loan may not be
reborrowed.
SECTION 3.2. INTEREST PROVISIONS. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this SECTION 3.2.
SECTION 3.2.1. RATES. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrower may elect that all or a
permitted portion of the Loan accrue interest at a rate per annum:
(a) on that portion maintained from time to time as a Base Rate Loan,
equal to the sum of the Alternate Base Rate from time to time in effect
plus a margin of 0.50 of 1%; and
(b) on that portion maintained as a Eurodollar Rate Loan, during each
Interest Period applicable thereto, equal to the sum of the Eurodollar Rate
(Reserve Adjusted) for such Interest Period plus a margin of 1.6875%.
"EURODOLLAR RATE (RESERVE ADJUSTED)" means, for any Interest Period, with
respect to a Eurodollar Rate Loan the rate of interest per annum (rounded upward
to the next 1/16th of 1%) determined by the Lender as follows:
Eurodollar Rate
(Reserve Adjusted) = Eurodollar Rate
-----------------------------------
1.00- Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect on such
day (whether or not applicable to the Lender) under regulations issued
from time to time by the F.R.S. Board for determining the maximum
reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities"); and
"EURODOLLAR RATE" means the rate of interest per annum determined
by the Lender as the rate at which dollar deposits in the approximate
amount of the Lender's Eurodollar Rate Loan for such Interest Period
F-21
would be offered by the BofA's Grand Cayman Branch, Grand Cayman
B.W.I. (or such other office as may be designated for such purpose by
the Lender), to major banks in the offshore dollar interbank market at
their request at approximately 11:00 a.m. (New York City time) two
Business Days prior to the commencement of such Interest Period.
The Eurodollar Rate shall be adjusted automatically as to all
Eurodollar Rate Loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
All Eurodollar Rate Loans shall bear interest from and including the first
day of the applicable Interest Period to (but not including) the last day of
such Interest Period at the interest rate determined as applicable to such
Eurodollar Rate Loan. All Base Rate Loans shall bear interest from and
including the date such Loans are made to (but not including) the day such Loans
are repaid or converted into Eurodollar Rate Loans.
SECTION 3.2.2. DEFAULT RATES. So long as any Event of Default shall have
occurred and be continuing hereunder, interest on the unpaid principal amount of
the Loans outstanding shall be paid on demand at a rate per annum equal to the
Alternate Base Rate plus a margin of 2.50%, and after the date any principal
amount of any Loan has become due and payable (whether on the Stated Maturity
Date, upon acceleration or otherwise), or after any other monetary Obligation of
the Borrower shall have become due and payable, the Borrower shall pay interest
(after as well as before judgment) on demand on such principal amounts and, if
permitted by law, all such other monetary Obligations, at a rate per annum equal
to the Alternate Base Rate plus a margin of 2.50%
SECTION 3.2.3. PAYMENT DATES. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on that portion of the Loan being paid or prepaid, on the date of
any such payment or prepayment;
(c) with respect to Base Rate Loans, on each Quarterly Payment Date
occurring after the Effective Date;
(d) with respect to Eurodollar Rate Loans, the last day of each
applicable Interest Period (and, if such Interest Period shall exceed three
months, at the end of each three month day period occurring during such
Interest Period);
(e) with respect to any Base Rate Loans converted into Eurodollar Rate
Loans on a day when interest would not otherwise have been payable pursuant
to CLAUSE (c), on the date of such conversion; and
F-22
(f) on that portion of any Loans the Stated Maturity Date of which is
accelerated pursuant to SECTION 8.2 or SECTION 8.3, immediately upon such
acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.2.4. FEES. The Borrower agrees to pay to the Lender, for the
period (including any portion thereof when its Commitment is suspended by reason
of the Borrower's inability to satisfy any condition of ARTICLE V) commencing on
the date hereof and continuing through the final Commitment Termination Date, a
commitment fee at the rate of 0.0625% per annum of the sum of the average daily
unused portion of the Commitment Amount. Such commitment fees shall be payable
by the Borrower in arrears on each Quarterly Payment Date, commencing with the
first such date after the date hereof, and on the Commitment Termination Date.
ARTICLE IV
CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS
SECTION 4.1. EURODOLLAR RATE LENDING UNLAWFUL. If the Lender shall
determine (which determination shall, upon notice thereof to the Borrower, be
conclusive and binding on the Borrower) that the introduction of or any change
in or in the interpretation of any law makes it unlawful, or any central bank or
other governmental authority asserts that it is unlawful, for the Lender to
make, continue or maintain any Loan as, or to convert any Loan into, a
Eurodollar Rate Loan, the obligations of the Lender to make, continue, maintain
or convert any such Loans shall, upon such determination, forthwith be suspended
until the Lender shall notify the Borrower that the circumstances causing such
suspension no longer exist, and all Eurodollar Rate Loans of such type shall
automatically convert into Base Rate Loans at the end of the then current
Interest Periods with respect thereto or sooner, if required by such law or
assertion.
SECTION 4.2. DEPOSITS UNAVAILABLE. If the Lender shall have determined
that
(a) Dollar deposits, in the relevant amount and for the relevant
Interest Period are not available to the Lender in its relevant market; or
(b) by reason of circumstances affecting the Lender's relevant
market, adequate means do not exist for ascertaining the interest rate
applicable hereunder to Eurodollar Rate Loans of such type,
then, upon notice from the Lender to the Borrower the obligations of the Lender
under SECTION 2.3 and SECTION 2.4 to make or continue any Loans as, or to
convert any Loans into, Eurodollar
F-23
Rate Loans of such type shall forthwith be suspended until the Lender shall
notify the Borrower that the circumstances causing such suspension no longer
exist.
SECTION 4.3. INCREASED COSTS, ETC. The Borrower agrees to reimburse the
Lender, upon demand, for any increase in the cost to the Lender of, or any
reduction in the amount of any sum receivable by the Lender in respect of,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, Eurodollar Rate Loans (including without limitation by reason of any
increase in any reserve requirements or taxes).
The Lender shall promptly notify the Borrower in writing of the occurrence
of any such event, such notice to state, in reasonable detail, the reasons
therefor and the additional amount required fully to compensate the Lender for
such increased cost or reduced amount. Such additional amounts shall be payable
by the Borrower directly to the Lender within five days of its receipt of such
notice, and such notice shall, in the absence of manifest error, be conclusive
and binding on the Borrower. The Lender will use such method of allocation as
it deems reasonable and appropriate.
SECTION 4.4. FUNDING LOSSES. In the event the Lender shall incur any loss
or expense (including any loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by the Lender to make,
continue or maintain any portion of the principal amount of any Loan as, or to
convert any portion of the principal amount of any Loan into, a Eurodollar Rate
Loan) as a result of
(a) any conversion or repayment or prepayment of the principal amount
of any Eurodollar Rate Loan on a date other than the scheduled last day of
the Interest Period applicable thereto, whether pursuant to SECTION 3.1 or
otherwise;
(b) any Loans not being made as Eurodollar Rate Loans in accordance
with the Borrower's request therefor; or
(c) any Loans not being continued as, or converted into, Eurodollar
Rate Loans in accordance with the Continuation/Conversion Notice therefor,
then, upon the written notice of the Lender to the Borrower, the Borrower shall,
within five days of its receipt thereof, pay directly to the Lender such amount
as will (in the reasonable determination of the Lender) reimburse the Lender for
such loss or expense. Such written notice (which shall include calculations in
reasonable detail) shall, in the absence of manifest error, be conclusive and
binding on the Borrower.
SECTION 4.5. INCREASED CAPITAL COSTS. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required
F-24
or expected to be maintained by the Lender or any Person controlling the
Lender, and the Lender determines (in its sole and absolute discretion) that
the rate of return on its or the controlling Person's capital as a
consequence of its Commitment or Loans is reduced to a level below that which
the Lender or such controlling Person could have achieved but for the
occurrence of any such circumstance, then, in any such case upon notice from
time to time by the Lender to the Borrower, the Borrower shall immediately
pay directly to the Lender additional amounts sufficient to compensate the
Lender or such controlling Person for such reduction in rate of return. A
statement of the Lender as to any such additional amount or amounts
(including calculations thereof in reasonable detail) shall, in the absence
of manifest error, be conclusive and binding on the Borrower. In determining
such amount, the Lender may use any method of averaging and attribution that
it (in its sole and absolute discretion) shall deem applicable.
SECTION 4.6. TAXES. All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by the Lender's net
income or receipts (such non-excluded items being called "TAXES"). In the event
that any withholding or deduction from any payment to be made by the Borrower
hereunder is required in respect of any Taxes pursuant to any applicable law,
rule or regulation, then the Borrower will
(a) pay directly to the relevant authority the full amount required to
be so withheld or deducted;
(b) promptly forward to the Lender an official receipt or other
documentation satisfactory to the Lender evidencing such payment to such
authority; and
(c) pay to the Lender such additional amount or amounts as is
necessary to ensure that the net amount actually received by Lender will
equal the full amount the Lender would have received had no such
withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Lender with respect to
any payment received by the Lender hereunder, the Lender may pay such Taxes and
the Borrower will promptly pay such additional amounts (including any penalties,
interest or expenses) as is necessary in order that the net amount received by
such person after the payment of such Taxes (including any Taxes on such
additional amount) shall equal the amount such person would have received had
not such Taxes been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Lender, for the account of the Lender, the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Lender for any incremental Taxes, interest or penalties that may
become payable by the Lender as a result of any such failure. For purposes of
this SECTION 4.6, a distribution hereunder by the Lender to or for the account
of the Lender shall be deemed a payment by the Borrower.
F-25
SECTION 4.7. PAYMENTS, COMPUTATIONS, ETC. All such payments required to
be made to the Lender shall be made, without setoff, deduction or counterclaim,
not later than 11:00 a.m., Chicago, Illinois time on the date due, in same day
or immediately available funds, to such account as the Lender shall specify from
time to time by notice to the Borrower. Funds received after that time shall be
deemed to have been received by the Lender on the next succeeding Business Day.
The Borrower hereby authorizes the Lender to charge any account maintained by
the Borrower with the Lender for any amount due and payable under this Agreement
as and when so due and payable. All interest and fees shall be computed on the
basis of the actual number of days (including the first day but excluding the
last day) occurring during the period for which such interest or fee is payable
over a year comprised of 360 days. Whenever any payment to be made shall
otherwise be due on a day which is not a Business Day, such payment shall
(except as otherwise required by CLAUSE (c) of the definition of the term
"INTEREST PERIOD" with respect to Eurodollar Rate Loans) be made on the next
succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.
SECTION 4.8. SETOFF. The Lender shall, upon the occurrence of any Default
described in CLAUSES (a) through (d) of SECTION 8.1.9 or, upon the occurrence of
any other Event of Default, have the right to appropriate and apply to the
payment of the Obligations owing to it (whether or not then due), and (as
security for such Obligations) the Borrower hereby grants to the Lender a
continuing security interest in, any and all balances, credits, deposits,
accounts or moneys of the Borrower then or thereafter maintained with or
otherwise held by the Lender. The Lender agrees promptly to notify the Borrower
after any such setoff and application made by the Lender; PROVIDED, HOWEVER,
that the failure to give such notice shall not affect the validity of such
setoff and application. The rights of the Lender under this Section are in
addition to other rights and remedies (including other rights of setoff under
applicable law or otherwise) which the Lender may have.
SECTION 4.9. USE OF PROCEEDS. The Borrower shall apply the proceeds of
the Loan to finance the payment of any liabilities of the Borrower under the
Guarantee.
ARTICLE V
CONDITIONS TO EFFECTIVENESS AND BORROWING
SECTION 5.1. EFFECTIVENESS. This Agreement shall become effective on the
date (the "EFFECTIVE DATE") when the Lender shall have received counterparts
hereof executed by each of the parties listed on the signature pages hereto and
when the Lender shall be satisfied that each of the conditions precedent set
forth in SECTIONS 5.1.1 through 5.1.12 have been fulfilled.
SECTION 5.1.1. RESOLUTIONS, ETC. The Lender shall have received
(a) from each of the Borrower and IFSC a certificate, dated the
Effective Date, of its Secretary or Assistant Secretary as to
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(i) resolutions of its Board of Directors then in full force and
effect authorizing the execution, delivery and performance of, in the
case of the Borrower, this Agreement, the Note, Pledge Agreement I,
the Guarantee and each other Loan Document executed or to be executed
by it and, in the case of IFSC, Pledge Agreement II and each other
Loan Document executed or to be executed by it; and
(ii) the incumbency and signatures of those of its officers
authorized to act with respect to, in the case of the Borrower, this
Agreement, the Note, Pledge Agreement I, the Guarantee and each other
Loan Document executed or to be executed by it and, in the case of
IFSC, Pledge Agreement II and each other Loan Document executed or to
be executed by it,
upon which certificate the Lender may conclusively rely until the Lender shall
have received a further certificate of the Secretary of the Borrower or IFSC, as
appropriate, canceling or amending such prior certificate, which further
certificate shall be reasonably satisfactory to the Lender; and
(b) such other documents (certified if requested) as the Lender may
reasonably request with respect to any matter relevant to this Agreement or
the Loan Documents or the transactions contemplated hereby or thereby.
SECTION 5.1.2. DELIVERY OF NOTE. The Lender shall have received from the
Borrower a duly executed Note, with appropriate insertions, dated as of the
Effective Date.
SECTION 5.1.3. SATISFACTION WITH TAX SHARING AGREEMENTS. The Lender shall
have received true copies (as certified by an authorized officer of the
Borrower) of, and reviewed and become satisfied with the provisions of, the Tax
Sharing Agreements and any other arrangements with respect thereto or a
certificate from the Borrower that such Tax Sharing Agreements and other
arrangements remain unchanged since December 30, 1993.
SECTION 5.1.4. OPINIONS OF COUNSEL. The Lender shall have received an
opinion, dated the Effective Date and addressed to the Lender, from Xxxxx X.
Xxxxxx, general counsel to the Borrower, substantially in the form of EXHIBIT F
hereto.
SECTION 5.1.5. CLOSING FEES, EXPENSES, ETC. The Lender shall have
received all fees, and all costs and expenses for which invoices have been
provided, due and payable pursuant to SECTIONS 3.2.4 and 10.9.
SECTION 5.1.6. PLEDGE AGREEMENTS. The Lender shall have received the
Pledge Agreements, each dated as of the Effective Date, duly executed by the
Borrower or IFSC, as appropriate, together with (a) the certificates, evidencing
all of the issued and outstanding shares of capital stock pledged pursuant to
the Pledge Agreements, which certificates shall in each case be accompanied by
undated stock powers duly executed in blank, or, if any securities pledged
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pursuant to the Pledge Agreements are uncertificated securities, confirmation
and evidence satisfactory to the Lender that the security interest in such
uncertificated securities has been transferred to and perfected by the Lender in
accordance with the Uniform Commercial Code, as in effect in the State of
Illinois, in each case together with any Uniform Commercial Code Financing
Statements which may be requested by the Lender and (b) the original Surplus
Debentures, duly endorsed in blank and accompanied by a consent by Madison to
such pledge by IFSC in favor of the Lender.
SECTION 5.1.7. GUARANTEE. The Lender shall have received the Guarantee,
duly executed by the Borrower.
SECTION 5.1.8. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. Both before
and after giving effect to the making of the Loan on the Effective Date (but, if
any Default of the nature referred to in SECTION 8.1.5 shall have occurred with
respect to any other Indebtedness, without giving effect to the application,
directly or indirectly, of the proceeds thereof), the following statements shall
be true and correct (and the Borrower shall have furnished the Lender with a
certificate of an Authorized Officer of the Borrower, dated the Effective Date,
to the effect that):
(a) the representations and warranties set forth in ARTICLE VI
(excluding, however, those contained in SECTION 6.7) of this Agreement and
Article III of each of the Pledge Agreements shall be true and correct in
all material respects with the same effect as if then made (unless stated
to relate solely to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date);
(b) except as disclosed by the Borrower to the Lender pursuant to
SECTION 6.7,
(i) no labor controversy, litigation, arbitration or governmental
investigation or proceeding shall be pending or, to the knowledge of
the Borrower, threatened against the Borrower or any of its
Subsidiaries which might have a Materially Adverse Effect or which
purports to affect the legality, validity or enforceability of this
Agreement, the Note, either Pledge Agreement, or any other Loan
Document, and
(ii) no development shall have occurred in any labor controversy,
litigation, arbitration or governmental investigation or proceeding
disclosed pursuant to SECTION 6.7 which might have a Materially
Adverse Effect; and
(c) no Default shall have then occurred and be continuing, and neither
the Borrower nor any of its Subsidiaries shall be in violation of any law
or governmental regulation or court order or decree, the violation of which
could have a Materially Adverse Effect.
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SECTION 5.1.9. CONTRIBUTION AGREEMENT. The Lender shall have received
fully executed counterparts of the Contribution Agreement, in form and substance
satisfactory to the Lender.
SECTION 5.1.10. EXISTING CREDIT AGREEMENT. Concurrently with the Loan,
the Existing Credit Agreement shall have been paid and terminated and the ZSC
Credit Agreement shall be effective.
SECTION 5.1.11. SATISFACTORY LEGAL FORM. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries shall be satisfactory in form and substance to the Lender and its
counsel; the Lender and its counsel shall have received all information,
approvals, opinions, documents or instruments as the Lender or its counsel may
reasonably request.
SECTION 5.1.12. BORROWING REQUEST. The Lender shall have received a
Borrowing Request for the Loan to be made on the Effective Date. Each of the
delivery of a Borrowing Request and the acceptance by the Borrower of the
proceeds of such Loans shall constitute a representation and warranty by the
Borrower that on the date of the Loan (both immediately before and after giving
effect to the Loan and the application of the proceeds thereof) the statements
made in SECTION 5.1.8 are true and correct.
SECTION 5.1.13. CONSENTS AND AMENDMENTS. The Lender shall have received
from the Borrower each of the following, substantially in form of Exhibits I and
J, respectively: (a) a consent and amendment of the Subordinated Note, duly
executed by ICC and Independence, and (b) a duly executed consent and amendment
of the Tax Allocation Agreement executed on February 15, 1995 and effective as
of December 16, 1993, between ICC (as successor by merger to ICG), Independence
Holding Company, and Independence Financial Services Corp.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make the
Loan hereunder, the Borrower represents and warrants unto the Lender as set
forth in this ARTICLE VI.
SECTION 6.1. ORGANIZATION, ETC. The Borrower and each of its Subsidiaries
is a corporation validly organized and existing and in good standing under the
laws of the State of its incorporation, is duly qualified to do business and is
in good standing as a foreign corporation in each jurisdiction where the nature
of its business requires such qualification (except where the failure to be so
qualified would not have a Materially Adverse Effect), and has full power and
authority and holds all requisite governmental licenses, permits and other
approvals to enter into and perform its Obligations under this Agreement, the
Note, the Pledge Agreements, the Guarantee and each other Loan Document to which
it is a party and to own and hold under lease its property and to conduct its
business substantially as currently conducted by it.
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SECTION 6.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The execution,
delivery and performance by the Borrower or IFSC, as the case may be, of this
Agreement, the Note, the Pledge Agreements, the Guarantee and each other Loan
Document executed or to be executed by it, are within the corporate powers of
the Borrower or IFSC, as the case may be, have been duly authorized by all
necessary corporate action, and do not
(a) contravene the Organic Documents of the Borrower or IFSC, as the
case may be;
(b) contravene any contractual restriction, law or governmental
regulation or court decree or order binding on or affecting the Borrower or
IFSC, as the case may be; or
(c) result in, or require the creation or imposition of, any Lien on
any of the Borrower's properties or the properties of any of its
Subsidiaries (except pursuant to the Loan Documents).
SECTION 6.3. GOVERNMENT APPROVAL, REGULATION, ETC. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance by the Borrower or IFSC, as the case may be, of this
Agreement, the Note, the Pledge Agreements, the Guarantee or any other Loan
Document to which it or IFSC, as the case may be, is a party. Neither the
Borrower nor any of its Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 6.4. VALIDITY, ETC. This Agreement has been duly executed and
delivered and constitutes, and the Note, each Pledge Agreement, the Guarantee
and each other Loan Document executed by the Borrower or IFSC, as the case may
be, will, on the due execution and delivery thereof, constitute, the legal,
valid and binding obligations of the Borrower or IFSC, as the case may be,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws applying to creditor's rights generally or general equitable principles.
SECTION 6.5. FINANCIAL INFORMATION. (a) The audited consolidated balance
sheet of the Borrower and its Subsidiaries, dated as of December 31, 1995, the
unaudited consolidating balance sheet of the Borrower and its Subsidiaries,
dated as of December 31, 1995, the unaudited consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries dated as of June 30, 1996,
and the related consolidated statements of income and cash flow have been
prepared in accordance with GAAP consistently applied, and present fairly the
consolidated financial condition of the corporations covered thereby as at the
dates thereof and the results of their operations for the periods then ended;
and since December 31, 1995, there has been no material adverse change in the
financial condition, operations, assets, business, properties or
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prospects of the Borrower and its Subsidiaries on a consolidated basis or in
the ability of the Borrower to repay the Obligations when due in accordance
with the terms hereof.
(b) The Statutory Financial Statements of each of (i) Madison and its
Subsidiaries and (ii) Standard and its Subsidiaries dated December 31, 1995 and
June 30, 1996, have been prepared in accordance with SAP and present fairly the
consolidated financial condition of the corporations covered thereby as at the
dates thereof and the results of their operations for the periods then ended and
have been duly filed with the Department or the Department-NY, as the case may
be; and, since December 31, 1995, there has been no material adverse change in
the financial condition, operations, assets, business, properties or prospects
of Madison and its Subsidiaries or Standard and its Subsidiaries, in each case
on a consolidated basis, or any adverse or critical notice received by the
Borrower or any of its Subsidiaries or action (to the best of the knowledge of
the Borrower and its Subsidiaries) taken by the Department or the Department-NY,
as the case may be, with respect thereto.
SECTION 6.6. RESTRICTIVE AGREEMENTS. Neither the Borrower nor any of its
Subsidiaries is a party to any agreement or arrangement of the nature referred
to in SECTION 7.2.13.
SECTION 6.7. LITIGATION, LABOR CONTROVERSIES, ETC. There is no pending
or, to the knowledge of the Borrower, threatened litigation, action, proceeding
or labor controversy affecting the Borrower or any of its Subsidiaries, or any
of their respective properties, businesses, assets or revenues, which has any
reasonable likelihood of having a Materially Adverse Effect or which purports to
affect the legality, validity or enforceability of this Agreement, the Note,
either Pledge Agreement, the Guarantee or any other Loan Document, except as
disclosed in ITEM 6.7 ("Litigation") of the Disclosure Schedule.
SECTION 6.8. SUBSIDIARIES. The Borrower has, as of the date hereof, no
Subsidiaries, except those Subsidiaries which are identified in ITEM 6.8
("Existing Subsidiaries") of the Disclosure Schedule.
SECTION 6.9. OWNERSHIP OF PROPERTIES. The Borrower and each of its
Subsidiaries owns good and marketable title to all of its owned properties and
assets, real and personal, tangible and intangible, of any nature whatsoever
(including patents, trademarks, trade names, service marks and copyrights), and
a good leasehold interest in all of its leased properties, in each case free and
clear of all Liens, charges or claims (including infringement claims with
respect to patents, trademarks, copyrights and the like) except as permitted
pursuant to SECTION 7.2.3.
SECTION 6.10. TAXES. The Borrower and each of its Subsidiaries has filed
all tax returns and reports required by law to have been filed by it and has
paid all taxes and governmental charges thereby shown to be owing, except any
such taxes or charges which are being contested in good faith by appropriate
action and for which adequate reserves in accordance with GAAP shall have been
set aside on its books.
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SECTION 6.11. PENSION AND WELFARE PLANS. During the twelve-consecutive-
month period prior to the date of the execution and delivery of this Agreement
and prior to the date of any Loan hereunder, no steps have been taken to
terminate any Pension Plan, and no contribution failure has occurred with
respect to any Pension Plan sufficient to give rise to a Lien under section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which might result in the incurrence by the Borrower
or any member of the Controlled Group of any material liability, fine or
penalty. Except as disclosed in ITEM 6.11 ("Employee Benefit Plans") of the
Disclosure Schedule, neither the Borrower nor any member of the Controlled Group
has any contingent liability with respect to any post-retirement benefit under a
Welfare Plan, other than liability for continuation coverage described in Part 6
of Title I of ERISA.
SECTION 6.12. ENVIRONMENTAL WARRANTIES. Except as set forth in ITEM 6.12
("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying groundwater)
owned or leased by the Borrower or any of its Subsidiaries have been, and
continue to be, owned or leased by the Borrower and its Subsidiaries in
material compliance with all Environmental Laws;
(b) there have been no past, and there are no pending or, to the best
of the Borrower's knowledge, threatened
(i) claims, complaints, notices or requests for information
received by the Borrower or any of its Subsidiaries with respect to
any alleged violation of any Environmental Law, or
(ii) complaints, notices or inquiries to the Borrower or any of
its Subsidiaries regarding potential liability under any Environmental
Law;
(c) there have been no Releases of Hazardous Materials at, on or under
any property now or previously owned or leased by the Borrower or any of
its Subsidiaries that, singly or in the aggregate, have, or may reasonably
be expected to have, a Materially Adverse Effect;
(d) the Borrower and its Subsidiaries have been issued and are in
material compliance with all permits, certificates, approvals, licenses and
other authorizations relating to environmental matters and necessary or
appropriate for their businesses;
(e) no property now or previously owned or leased by the Borrower or
any of its Subsidiaries is listed or, to the best of the Borrower's
knowledge, proposed for listing (with respect to owned property only) on
the National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list of sites requiring investigation or clean-up;
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(f) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or
previously owned or leased by the Borrower or any of its Subsidiaries that,
singly or in the aggregate, have, or may reasonably be expected to have, a
Materially Adverse Effect;
(g) neither the Borrower nor any Subsidiary of the Borrower has
directly transported or directly arranged for the transportation of any
Hazardous Material to any location which is listed or, to the best of the
Borrower's knowledge, proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list or which is
the subject of federal, state or local enforcement actions or other
investigations which may lead to material claims against the Borrower or
such Subsidiary thereof for any remedial work, damage to natural resources
or personal injury, including claims under CERCLA;
(h) there are no polychlorinated biphenyls or friable asbestos present
at any property now or previously owned or leased by the Borrower or any
Subsidiary of the Borrower that, singly or in the aggregate, have, or may
reasonably be expected to have, a Materially Adverse Effect; and
(i) no conditions exist at, on or under any property now or previously
owned or leased or operated by the Borrower which, with the passage of
time, or the giving of notice or both, would give rise to liability which
would have, or may reasonably be expected to have, singly or in the
aggregate, a Materially Adverse Effect under any Environmental Law.
SECTION 6.13. REGULATIONS G, U AND X. Neither the Borrower nor any
Subsidiary of the Borrower is engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock, and no proceeds of any Loans
will be used for a purpose which violates, or would be inconsistent with, F.R.S.
Board Regulation G, U or X. Less than 25% of the assets of the Borrower and the
consolidated assets of the Borrower and its Subsidiaries consist of margin
stock. Terms for which meanings are provided in F.R.S. Board Regulation G, U or
X or any regulations substituted therefor, as from time to time in effect, are
used in this Section with such meanings.
SECTION 6.14. ACCURACY OF INFORMATION. All factual information heretofore
or contemporaneously furnished by or on behalf of the Borrower, or any
Subsidiary of the Borrower, in writing to the Lender for purposes of or in
connection with this Agreement or any transaction contemplated hereby and all
other such factual information hereafter furnished by or on behalf of the
Borrower, or any Subsidiary of the Borrower, to the Lender will be, true and
accurate in every material respect on the date as of which such information is
dated or certified, and, as to information (other than financial statements)
furnished prior to the Effective Date, as of the Effective Date, and such
information is not, or shall not be, as the case may be, incomplete by omitting
to state any material fact necessary to make such information not misleading.
The Borrower has furnished the Lender a true and complete copy of the Tax
Sharing Agreements and
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the Contribution Agreement and any agreement required to be entered into
pursuant to any of the foregoing constitute or will constitute the only
arrangements in respect of taxes to which the Borrower, Standard or Madison
is a party as of the Effective Date.
SECTION 6.15. SUBORDINATED NOTE. Notwithstanding any bankruptcy,
insolvency, reorganization, moratorium or similar proceeding in respect of the
Borrower, at all times, (a) the subordination provisions of the Subordinated
Note will be enforceable by the Lender with respect to the Obligations, (b) all
Obligations, including the Obligations to pay principal of and interest on the
Loan and fees in connection therewith, constitute "Senior Indebtedness", as
defined in the Subordinated Note, and all such Obligations will be entitled to
the benefits of subordination created by the Subordinated Note, and (c) all
payments of principal of or interest on the Subordinated Note made by the
Borrower or from the liquidation of its property will be subject to such
subordination provisions. The Borrower acknowledges that the Lender is entering
into this Agreement, and is extending the Loan, in reliance upon the
subordination provisions contained in the Subordinated Note. The Borrower has
heretofore or simultaneously with the execution of this Agreement furnished to
the Lender a true and complete copy of the executed Subordinated Note.
ARTICLE VII
COVENANTS
SECTION 7.1. AFFIRMATIVE COVENANTS. The Borrower agrees with the Lender
that, until the Commitment has terminated and all Obligations have been paid and
performed in full, the Borrower will perform the obligations set forth in this
SECTION 7.1.
SECTION 7.1.1. FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. The Borrower
will furnish, or will cause to be furnished, to the Lender copies of the
following financial statements, reports, notices and information:
(a) as soon as available and in any event within 60 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year of the
Borrower, consolidated and consolidating balance sheets of the Borrower and
its Subsidiaries (and separately for each of Madison and its Subsidiaries
and Standard and its Subsidiaries) as of the end of such Fiscal Quarter and
consolidated and consolidating statements of income and cash flow of the
Borrower and its Subsidiaries (and separately for each of Madison and its
Subsidiaries and Standard and its Subsidiaries, except that such financial
statements for Madison and its Subsidiaries and Standard and its
Subsidiaries shall comprise consolidated and consolidating statements of
income and consolidated statements of cash flow) for such Fiscal Quarter
and for the period commencing at the end of the previous Fiscal Year and
ending with the end of such Fiscal Quarter, certified by the chief
financial Authorized Officer of the Borrower;
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(b) as soon as available and in any event within 120 days after the
end of each Fiscal Year of the Borrower, a copy of the annual audit report
for such Fiscal Year for the Borrower and its Subsidiaries (and separately
for Madison and its Subsidiaries and Standard and its Subsidiaries),
including therein consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries (and separately for Madison and its
Subsidiaries and Standard and its Subsidiaries) as of the end of such
Fiscal Year and consolidated and consolidating statements of income and
cash flow of the Borrower and its Subsidiaries (and separately for Madison
and its Subsidiaries and Standard and its Subsidiaries, except that such
financial statements for Madison and its Subsidiaries and Standard and its
Subsidiaries shall comprise consolidated and consolidating statements of
income and consolidated statements of cash flow) for such Fiscal Year, in
each case certified (without any Impermissible Qualification) in a manner
acceptable to the Lender by KPMG Peat Marwick or other independent public
accountants acceptable to the Lender, together with a certificate from such
accountants containing a computation of, and showing compliance with, each
of the financial ratios and restrictions contained in SECTION 7.2.4 and to
the effect that, in making the examination necessary for the signing of
such annual report by such accountants, they have not become aware of any
Default or Event of Default that has occurred and is continuing, or, if
they have become aware of such Default or Event of Default, describing such
Default or Event of Default and the steps, if any, being taken to cure it;
(c) as soon as available and in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year of Madison
and Standard, Statutory Accounting Statements for Madison and Standard as
of the end of such Fiscal Quarter and for the period commencing at the end
of the previous Fiscal Year and ending with the end of such Fiscal Quarter,
in each case as filed with the Department or the Department-NY, as the case
may be, and certified by the chief financial Authorized Officers of each of
Madison and Standard;
(d) as soon as available and in any event within 60 days after the end
of each Fiscal Year of Madison and Standard, Statutory Accounting
Statements for Madison and Standard as of the end of such Fiscal Year and
for the period comprising such Fiscal Year, in each case as filed with the
Department or the Department-NY, as the case may be, and certified by the
chief financial Authorized Officers of each of Madison and Standard;
(e) as soon as available and in any event within 60 days after the end
of each Fiscal Quarter and within 120 days after the end of each Fiscal
Year, a certificate, executed by the chief financial Authorized Officer of
the Borrower, showing (in reasonable detail and with appropriate
calculations and computations in all respects satisfactory to the Lender)
compliance with the financial covenants set forth in SECTION 7.2.4;
(f) as soon as possible and in any event within five days after the
occurrence of each Default, a statement of the chief financial Authorized
Officer of the Borrower setting
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forth details of such Default and, within four Business Days thereafter,
the action which the Borrower has taken and proposes to take with respect
thereto;
(g) as soon as possible and in any event within five days after (x)
the occurrence of any adverse development with respect to any litigation,
action, proceeding or labor controversy described in SECTION 6.7 or (y) the
commencement of any labor controversy, litigation, action or proceeding of
the type described in SECTION 6.7, notice thereof and copies of all
documentation relating thereto;
(h) promptly after the sending or filing thereof, copies of (x) all
reports and registration statements which the Borrower or any of its
Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange or, as to any reports or materials bearing on
the financial condition of the Borrower or any of its Subsidiaries or as to
any other reports which the Borrower reasonably determines to be material
to the Lender or the Obligations, with the Department, the Department-NY or
the Department-Delaware and (y) all reports which the Borrower sends to any
of its securityholders and which the Borrower reasonably determines to be
material to the Lender or the Obligations;
(i) immediately upon becoming aware of the institution of any steps by
the Borrower or any other Person to terminate any Pension Plan, or the
failure to make a required contribution to any Pension Plan if such failure
is sufficient to give rise to a Lien under section 302(f) of ERISA, or the
taking of any action with respect to a Pension Plan which could result in
the requirement that the Borrower furnish a bond or other security to the
PBGC or such Pension Plan, or the occurrence of any event with respect to
any Pension Plan which could result in the incurrence by the Borrower of
any material liability, fine or penalty, or any material increase in the
contingent liability of the Borrower with respect to any post-retirement
Welfare Plan benefit, notice thereof and copies of all documentation
relating thereto;
(j) within five Business Days of the receipt of any such notice,
notice of actual suspension, termination, revocation or cancellation of any
license for Madison or Standard by any governmental authority or agency or
of receipt of notice from any governmental authority or agency notifying
the Borrower or Standard or Madison of a hearing, relating to any proposed
suspension, termination, revocation or cancellation, including any request
by a governmental authority or agency which commits the Borrower or Madison
or Standard to take, or to refrain from taking, any action which, in each
case, would have a Materially Adverse Effect; and
(k) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as the
Lender may from time to time reasonably request.
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SECTION 7.1.2. COMPLIANCE WITH LAWS, ETC. The Borrower will, and will
cause each of its Subsidiaries to, comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to include
(without limitation):
(a) the maintenance and preservation of its corporate existence
(except as otherwise permitted under SECTION 7.2.10) and qualification as a
foreign corporation in each jurisdiction where the nature of its business
makes such qualification necessary and where the failure to so qualify
might have a Materially Adverse Effect; and
(b) the payment, before the same become delinquent, of all taxes,
assessments and governmental charges imposed upon it or upon its property
except to the extent being contested in good faith by appropriate action
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books.
SECTION 7.1.3. MAINTENANCE OF PROPERTIES. The Borrower will, and will
cause each of its Subsidiaries to, maintain, preserve, protect and keep its
properties in good repair, working order and condition, and make necessary and
proper repairs, renewals and replacements, so that its business carried on in
connection therewith may be properly conducted at all times unless the Borrower
determines in good faith that the continued maintenance of any of its properties
is no longer economically desirable and the failure to so maintain such
properties would not have a Materially Adverse Effect.
SECTION 7.1.4. INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with responsible insurance
companies insurance with respect to its properties and business (including
business interruption insurance) against such casualties and contingencies and
of such types and in such amounts as is customary in the case of similar
businesses and will, upon request of the Lender, furnish to the Lender at
reasonable intervals a certificate of an Authorized Officer of the Borrower
setting forth the nature and extent of all insurance maintained by the Borrower
and its Subsidiaries in accordance with this Section.
SECTION 7.1.5. BOOKS AND RECORDS. The Borrower will, and will cause each
of its Subsidiaries to, keep books and records which accurately reflect all of
its material business affairs and transactions and permit the Lender or any of
its representatives, at reasonable times and intervals, to visit all of its
offices, to discuss its financial matters with its officers and independent
public accountant (and the Borrower hereby authorizes such independent public
accountant to discuss the Borrower's financial matters with the Lender or its
representatives whether or not any representative of the Borrower is present)
and to examine (and, at the expense of the Borrower, photocopy extracts from)
any of its books or other corporate records. The Borrower shall pay any fees of
such independent public accountant incurred in connection with the Lender's
exercise of its rights pursuant to this Section.
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SECTION 7.1.6. ENVIRONMENTAL COVENANT. The Borrower will, and will cause
each of its Subsidiaries to,
(a) use and operate all of its facilities and properties in material
compliance with all Environmental Laws, keep all necessary permits,
approvals, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in material compliance
therewith, and handle all Hazardous Materials in material compliance with
all applicable Environmental Laws;
(b) immediately notify the Lender and provide copies upon receipt of
all written claims, complaints, notices or inquiries relating to the
condition of its facilities and properties or compliance with Environmental
Laws; and
(c) provide such information and certifications which the Lender may
reasonably request from time to time to evidence compliance with this
SECTION 7.1.6.
SECTION 7.2. NEGATIVE COVENANTS. The Borrower agrees with the Lender
that, until the Commitment has terminated and all Obligations have been paid and
performed in full, the Borrower will, and will cause each of its Subsidiaries
to, perform the obligations set forth in this SECTION 7.2.
SECTION 7.2.1. BUSINESS ACTIVITIES. The Borrower will not, and will not
permit any of its Subsidiaries to (a) engage in any business activity, except in
the case of the Borrower as a holding company which directly owns 100% of the
capital stock of IFSC, which is a holding company which owns 100% of the capital
stock of Madison, which owns 100% of the capital stock of Standard, which are
insurance companies engaged in the life and health insurance businesses and the
insurance business, in the case of International Benefit Administrators LLC, the
business of a third party insurance administrator and such activities as may be
incidental or related thereto (or, in the case of First Standard, the property
and casualty insurance and reinsurance businesses, in the case of On-Line
Brokerage, Inc., the insurance agency business and, in the case of existing or,
as permitted by SECTION 7.2.4(c), to-be-formed investment subsidiaries,
investments consistent with applicable insurance laws and not otherwise
inconsistent with this Agreement) or (b) permit IFSC to (i) create, incur,
assume or suffer to exist any Indebtedness, Contingent Liabilities, other
liabilities or Liens (other than pursuant to the Loan Documents), (ii) make any
Investments of any kind in any Person (other than its existing Investment in
Madison and the Investment made in Madison with the proceeds of the Loan) or
make any Capital Expenditures; provided, that IFSC may make additional
Investments so long as the amount of any Investment shall not exceed the
Available Investment Amount at the time such Investment is made, (iii) enter
into any transaction of merger, consolidation or combination or make any other
fundamental change in or terminate its corporate existence, (iv) sell, lease,
license or otherwise dispose of or encumber any assets (except a customary lease
for its office) or enter into any material agreements, (v) sell, transfer or
pledge any of its capital stock or any capital stock of any of its Subsidiaries
to any Person (other than pursuant to the Pledge Agreements), or
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(vi) conduct, transact or otherwise engage in any business or activity
whatsoever, except holding its Investment in Madison.
SECTION 7.2.2. INDEBTEDNESS. The Borrower will not create, incur, assume
or suffer to exist or otherwise become or be liable in respect of any
Indebtedness, other than (a) Indebtedness in respect of the Loan and the other
Obligations and (b) subordinated Indebtedness in an aggregate principal amount
not to exceed $362,500 at any one time outstanding incurred from its controlling
stockholder pursuant to the Subordinated Note or on terms (including but not
limited to subordination terms) satisfactory to the Lender (as evidenced by its
written approval thereof).
SECTION 7.2.3. LIENS. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its property, revenues or assets, whether now owned or hereafter acquired,
except:
(a) Liens securing payment of the Obligations, granted pursuant to any
Loan Document;
(b) Liens consisting of deposits made by Madison and its Subsidiaries
in connection with reinsurance arrangements in the ordinary course of
business;
(c) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or
being contested in good faith by appropriate action and for which adequate
reserves in accordance with GAAP shall have been set aside on its books;
(d) Liens incurred in the ordinary course of business for sums not
overdue or being contested in good faith to the extent, and only to the
extent, such Liens, in the aggregate, secure obligations which do not
exceed an aggregate amount of $500,000;
(e) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue
or being contested in good faith by appropriate action and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books;
(f) Liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed money)
entered into in the ordinary course of business or to secure obligations on
surety or appeal bonds;
(g) judgment Liens in existence less than 30 days after the entry
thereof or with respect to which execution has been stayed or the payment
of which is covered in full
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(subject to a customary deductible) by insurance maintained with
responsible insurance companies; and
(h) Liens incurred by Madison or its Subsidiaries in connection with
repurchase agreements or similar investments made in the ordinary course of
business.
SECTION 7.2.4. FINANCIAL COVENANTS. The Borrower will not at any time
permit:
(a)(i) Madison Statutory Surplus to be less than $7,500,000 plus 50%
of the increase in the Madison Statutory Surplus in any fiscal year ending
on or after December 31, 1996 in which Madison realizes such an increase or
(ii) Madison Consolidated Statutory Surplus, as reflected on the then most
recent Statutory Financial Statements filed by Madison with the Department,
to be less than $40,000,000 plus 50% of the increase in the Madison
Consolidated Statutory Surplus in any fiscal year ending on or after
December 31, 1996 in which Madison realizes such an increase;
(b) Madison and its Subsidiaries (other than Standard and its
Subsidiaries), on a consolidated basis, to (i) have Investments (the
"Madison Restricted Investments") in Non-Investment Grade Investments
(excluding Madison's Investment in Standard and Madison's Investment in its
other direct Subsidiaries) which exceed 30% of the aggregate amount of its
"Invested Assets", valued in each case as set forth on the then most recent
Statutory Financial Statements filed by Madison with the Department;
provided, however that the Madison Restricted Investments plus the Standard
Restricted Investments shall not exceed 25% of the aggregate amount of the
"Investment Assets" of Madison and its Subsidiaries, valued in each case as
set forth on the then most recent Statutory Financial Statement filed by
Madison with the Department plus the aggregate amount of the "Invested
Assets" of Standard and its Subsidiaries valued in each case are set forth
in the then most recent Statutory Financial Statement filed by Standard
with the Department-NY, or (ii) have Investments in any particular Person
(other than its Subsidiaries, the United States Federal Government or
agencies thereof carrying the full faith and credit of the United States
Federal Government and investments in securities issued by the Government
National Mortgage Association) which exceed 15% of Madison Consolidated
Statutory Surplus as of its then most recent Statutory Financial Statements
filed with the Department;
(c) Madison to form, or permit Madison's Subsidiaries to form,
Subsidiaries not in existence on the date hereof except for new investment
Subsidiaries in accordance with applicable insurance regulations and
otherwise not inconsistent with the terms of this Agreement which, at any
time of determination, do not contain assets exceeding, in the aggregate,
an amount equal to 10% of Madison Consolidated Statutory Surplus as of its
then most recent Statutory Financial Statements filed with the Department
and furnished to the Lender;
(d) the Risk Based Capital Ratio for Madison to be less than 200%;
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(e) Standard Statutory Surplus, as reflected on the then most recent
Statutory Financial Statements filed by Standard with the Department-NY, to
be less than $32,500,000 plus 50% of the increase in the Standard Statutory
Surplus in any fiscal year ending on or after December 31, 1996 in which
Standard realizes such an increase;
(f) Standard and its Subsidiaries, on a consolidated basis, to have
(i) Investments in Non-Investment Grade Investments (the"Standard
Restricted Investments") (excluding Standard's Investment in its direct
Subsidiaries) which exceed 30% of the aggregate amount of its consolidated
"Invested Assets", valued in each case as set forth on the then most recent
Statutory Financial Statements filed by Standard with the Department-NY;
provided, however, that the Standard Restricted Investments plus the
Madison Restricted Investments shall not exceed 25% of the aggregate amount
of the "Invested Assets" of Standard and its Subsidiaries, valued in each
case as set forth in the then most recent Statutory Financial Statements
filed by Standard and its Subsidiaries with the Department-NY plus the
aggregate amount of the "Invested Assets" of Madison and its Subsidiaries
valued in each case as set forth in the then most recent Statutory
Financial Statement filed by Madison with the Department, or (ii)
Investments in any particular Person (other than its Subsidiaries, the
United States Federal Government or agencies thereof carrying the full
faith and credit of the United States Federal Government and investments in
securities issued by the Government National Mortgage Association) which
exceed 20% of Standard Statutory Surplus as of its then most recent
Statutory Financial Statements filed with the Department-NY;
(g) the Risk Based Capital Ratio for Standard to be less than 200%;
(h) the Borrower's Consolidated Tangible Net Worth at any time to be
less than $40,000,000 plus 50% of any increase in such Consolidated
Tangible Net Worth in any fiscal year ending on or after December 31, 1996
in which the Borrower realizes such an increase; and
(i) the Borrower's Consolidated Fixed Charge Ratio at any time to be
less than 1.5:1.
SECTION 7.2.5. INVESTMENTS. The Borrower will not make, incur, assume or
suffer to exist any Investment in any Person, except (a) Cash Equivalent
Investments, (b) its existing Investments in IFSC, (c) its contribution of the
proceeds of the Loan to IFSC; provided, that the Borrower may make additional
Investments so long as the amount of any Investment shall not exceed the
Available Invested Amount at the time of such Investment, and (d) its
contribution of $5,000,000 to IFSC, which $5,000,000 will be contributed by IFSC
to Madison in exchange for a Contribution Note dated October 31, 1996 which
shall be pledged to the Lender pursuant to the Pledge Agreement II.
SECTION 7.2.6. RESTRICTED PAYMENTS, ETC. On and at all times after the
Effective Date the Borrower will not, and will not permit any of its
Subsidiaries to:
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(a) declare, pay or make any dividend or distribution (in cash,
property or obligations) on any shares of any class of capital stock (now
or hereafter outstanding) of the Borrower or on any warrants, options or
other rights with respect to any shares of any class of capital stock (now
or hereafter outstanding) of the Borrower (other than dividends or
distributions payable in its common stock or warrants to purchase its
common stock or splitups or reclassifications of its stock into additional
or other shares of its common stock) or apply, or permit any of its
Subsidiaries to apply, any of its funds, property or assets to the
purchase, redemption, sinking fund or other retirement of, or agree or
permit any of its Subsidiaries to purchase or redeem or otherwise retire,
any shares of any class of capital stock (now or hereafter outstanding) of
the Borrower, or grant warrants, options or other rights with respect to
any shares of any class of capital stock (now or hereafter outstanding) of
the Borrower or any of its Subsidiaries; or
(b) make any deposit for any of the foregoing purposes;
provided, however, that the Borrower may take such actions otherwise prohibited
by this Section so long as the amount applied thereto shall not exceed the
Available Investment Amount at the time of such application; and provided,
further, that the Borrower may distribute shares of ZSC common stock held by it
to its stockholders; and provided, further, that the Borrower may exchange with
Xxxxx X. Xxxxxxxx shares of common stock in ZSC held by it for shares of common
stock in the Borrower.
SECTION 7.2.7. RENTAL OBLIGATIONS. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into at any time any arrangement which
does not create a Capitalized Lease Liability and which involves the leasing by
the Borrower or any of its Subsidiaries from any lessor of any real or personal
property (or any interest therein), other than leases entered into by Madison or
Standard or their Subsidiaries in the ordinary course of their respective
businesses.
SECTION 7.2.8. CAPITAL EXPENDITURES. The Borrower will not, and will not
permit any of its Subsidiaries to, make or commit to make any Capital
Expenditures, except Capital Expenditures made by Madison or Standard or their
Subsidiaries in the ordinary course of their respective businesses.
SECTION 7.2.9. TAKE OR PAY CONTRACTS. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into or be a party to any arrangement
for the purchase of materials, supplies, other property or services if such
arrangement by its express terms requires that payment be made by the Borrower
or such Subsidiary regardless of whether such materials, supplies, other
property or services are delivered or furnished to it.
SECTION 7.2.10. CONSOLIDATION, MERGER, ETC. The Borrower will not, and
will not permit any of its Subsidiaries to, liquidate or dissolve, consolidate
with, or merge into or with, any other Person, or purchase or otherwise acquire
all or any substantial part of the assets of any Person (or of any division
thereof), PROVIDED that Subsidiaries of Madison may be liquidated or
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merged into parent corporations or other Subsidiaries (other than Madison or
Standard) if to do so would not have a Materially Adverse Effect.
SECTION 7.2.11. ASSET DISPOSITIONS, ETC. The Borrower will not, and will
not permit any of its Subsidiaries to, sell, transfer, lease, contribute or
otherwise convey, or grant options, warrants or other rights with respect to,
all or any substantial part of its assets (including accounts receivable and
capital stock of Subsidiaries) to any Person, except for sales, transfers,
leases, contributions or conveyances by Madison or Standard in the ordinary
course of its business consistent with past practice and except that the
Borrower may exchange shares of common stock in ZSC held by it with Xxxxx X.
Xxxxxxxx for shares of common stock in the Borrower.
SECTION 7.2.12. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into, or cause, suffer or
permit to exist, any arrangement or contract with any of its other Affiliates
unless such arrangement or contract is fair and equitable to the Borrower or
such Subsidiary and is an arrangement or contract of the kind which would be
entered into by a prudent Person in the position of the Borrower or such
Subsidiary with a Person which is not one of its Affiliates.
SECTION 7.2.13. NEGATIVE PLEDGES, UPSTREAMING MONEY, ETC. The Borrower
will not, and will not permit any of its Subsidiaries to, enter into any
agreement (excluding this Agreement and any other Loan Document) or arrangement
restricting or prohibiting
(a) the creation or assumption of any Lien upon its properties,
revenues or assets, whether now owned or hereafter acquired, or the ability
of the Borrower or any other Obligor to amend or otherwise modify this
Agreement or any other Loan Document; or
(b) except as may be required pursuant to the insurance laws of the
State of Wisconsin in the case of Madison, of the State of New York in the
case of Standard or of the State of Delaware in the case of First Standard,
the ability of any Subsidiary to make any payments, directly or indirectly,
to the Borrower by way of dividends, advances, repayments of loans or
advances, reimbursements of management and other intercompany charges,
expenses and accruals or other returns on investments, or any other
agreement or arrangement which restricts the ability of any such Subsidiary
to make any payment, directly or indirectly, to the Borrower.
SECTION 7.2.14. MADISON AND STANDARD'S RATINGS. The Borrower will not at
any time permit or suffer to exist the rating by A.M. Best in its publication
"Best's Review" (or the rating of any nationally recognized rating agency in the
event a rating is not available from A.M. Best) of Madison to be less than "B+"
or Standard to be less than "B+" (or its equivalent of such other nationally
recognized agency).
SECTION 7.2.15. SURPLUS RELIEF REINSURANCE AGREEMENTS. The Borrower will
not, and will not permit Madison or Standard or any of their Subsidiaries to, at
any time enter into any Surplus Relief Reinsurance Agreement, other than Surplus
Relief Reinsurance Agreements entered
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into by Madison or Standard, PROVIDED, HOWEVER, that in any event, the
aggregate amount invested in such Surplus Relief Reinsurance Agreements by
Madison shall not exceed 15% of Madison Consolidated Statutory Surplus and by
Standard shall not exceed 15% of Standard Statutory Surplus.
SECTION 7.2.16. MANAGEMENT FEES. The Borrower will not, and will not
permit any of its Subsidiaries (including Madison and Standard) to, pay
management, consulting or similar fees to the ultimate majority shareholder or
any of its Affiliates (other than the Borrower) in excess of, in the aggregate,
a per annum amount equal to $725,000; PROVIDED, HOWEVER, that, in any event, any
such fees may be paid only so long as no Default shall have occurred and be
continuing or would occur after giving effect to payment of such fees.
SECTION 7.2.17. FISCAL YEAR. The Borrower will not, and will not permit
Madison or Standard to, change their Fiscal Year.
SECTION 7.2.18. DOMICILE, ETC. The Borrower will not permit Madison or
Standard to change the state of their domicile from Wisconsin or New York,
respectively.
SECTION 7.2.19. MODIFICATION OF AGREEMENTS, SUBORDINATED NOTE AND
CONTRIBUTION AGREEMENT. The Borrower will not consent to or enter into any
amendment, supplement or other modification of any of the terms or provisions
contained in, or applicable to, (a) the Tax Sharing Agreements, (b) the
Subordinated Note, (c) the Contribution Agreement, or (d) any agreement required
to be entered into pursuant to any of the foregoing.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. LISTING OF EVENTS OF DEFAULT. Each of the following events
or occurrences described in this SECTION 8.1 shall constitute an "EVENT OF
DEFAULT".
SECTION 8.1.1. NON-PAYMENT OF OBLIGATIONS. The Borrower shall default in
the payment or prepayment when due of any principal of the Loan, or the Borrower
shall default (and such default shall continue unremedied for a period of five
days) in the payment when due of any interest, fee or any other Obligation.
SECTION 8.1.2. BREACH OF WARRANTY. Any representation or warranty of
the Borrower or any other Obligor made or deemed to be made hereunder, in
either Pledge Agreement or in any other Loan Document executed by the
Borrower or any other Obligor or any other writing or certificate furnished
by or on behalf of the Borrower or any other Obligor to the Lender for the
purposes of or in connection with this Agreement, Pledge Agreement or any
such other Loan Document (including any certificates delivered pursuant to
ARTICLE V) is or shall be incorrect when made or deemed made in any material
respect.
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SECTION 8.1.3. NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS. The
Borrower or any other Obligor shall default in the due performance and
observance of any of its respective obligations under SECTION 7.2 or SECTION
7.1.1 hereof or under Article IV of either Pledge Agreement, provided that for
purposes of a default under SECTION 7.1.1, an Event of Default shall exist only
if such default shall continue unremedied for a period of five days.
SECTION 8.1.4. NON-PERFORMANCE OF OTHER COVENANTS AND OBLIGATIONS. The
Borrower or any Obligor shall default in its due performance and observance of
any other agreement contained herein, in either Pledge Agreement, in the
Guarantee or in any other Loan Document, and such default shall continue
unremedied for a period of 30 days after notice thereof shall have been given to
the Borrower by the Lender.
SECTION 8.1.5. DEFAULT ON OTHER INDEBTEDNESS. A default shall occur in
the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness equal to or exceeding $100,000
(other than Indebtedness described in SECTION 8.1.1) of Independence, the
Borrower or any of its Significant Subsidiaries, or a default shall occur in the
performance or observance of any obligation or condition with respect to such
Indebtedness if the effect of such default is to accelerate the maturity of any
such Indebtedness or such default shall continue unremedied for any applicable
period of time sufficient to permit the holder or holders of such Indebtedness,
or any trustee or agent for such holders, to cause such Indebtedness to become
due and payable prior to its expressed maturity.
SECTION 8.1.6. JUDGMENTS. Any judgment or order for the payment of money
in excess of $250,000 shall be rendered against the Borrower or any of its
Subsidiaries and there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect or, during such 30 day period, enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order and shall not have been stayed or withdrawn.
SECTION 8.1.7. PENSION PLANS. Any of the following events shall occur
with respect to any Pension Plan
(a) the institution of any steps by the Borrower, any member of its
Controlled Group or any other Person to terminate a Pension Plan if, as a
result of such termination, the Borrower or any such member could be
required to make a contribution to such Pension Plan, or could reasonably
expect to incur a liability or obligation to such Pension Plan, in excess
of $100,000; or
(b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION 8.1.8. CHANGE IN CONTROL. Any Change in Control shall occur.
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SECTION 8.1.9. BANKRUPTCY, INSOLVENCY, ETC. The Borrower or any of its
Significant Subsidiaries or Independence shall
(a) become insolvent or generally fail to pay, or admit in writing its
inability or unwillingness to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian or supervisor for
Independence the Borrower or any of its Significant Subsidiaries or any
property of any thereof, or make a general assignment for the benefit of
creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for Independence the Borrower or any of its
Significant Subsidiaries or for a substantial part of the property of any
thereof, and such trustee, receiver, sequestrator or other custodian shall
not be discharged within 60 days, PROVIDED that each of Independence, the
Borrower and each Significant Subsidiary hereby expressly authorize the
Lender to appear in any court conducting any relevant proceeding during
such 60-day period to preserve, protect and defend its rights under the
Loan Documents;
(d) commence voluntarily or have commenced against it involuntarily
any bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of Independence, the
Borrower or any of its Significant Subsidiaries and, if any such case or
proceeding is not commenced by Independence, the Borrower or such
Significant Subsidiary such case or proceeding shall be consented to or
acquiesced in by Independence, the Borrower or such Significant Subsidiary
or shall result in the entry of an order for relief or shall remain for 60
days undismissed, PROVIDED that each of Independence, the Borrower and each
Significant Subsidiary hereby expressly authorize the Lender to appear in
any court conducting any such case or proceeding during such 60-day period
to preserve, protect and defend its rights under the Loan Documents; or
(e) take any action authorizing, or in furtherance of, any of the
foregoing.
SECTION 8.1.10. IMPAIRMENT OF SECURITY, ETC. Any Loan Document, or any
Lien granted thereunder, shall (except in accordance with its terms), in whole
or in part, terminate, cease to be effective or cease to be the legally valid,
binding and enforceable obligation of any Obligor party thereto; or the
Borrower, any other Obligor or any other party shall, directly or indirectly,
contest in any manner such effectiveness, validity, binding nature or
enforceability; or any Lien securing any Obligation shall, in whole or in part,
cease to be a perfected first priority Lien, subject only to those exceptions
expressly permitted by such Loan Document.
SECTION 8.1.11. LICENSING; SEIZURE; ETC. The Department or the
Department-NY shall revoke, suspend, cancel or terminate Madison or Standard's
insurance licenses or otherwise cause
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Madison or Standard to cease, or effectively to cease, operating as a life
and health insurance company; or the Department or the Department-NY shall
seize control or effective control over Madison or Standard, or all or a
substantial part of their assets or properties; or, other than such
prohibitions or restrictions in effect on the Effective Date, the Department
or the Department-NY, as the case may be, shall prohibit or further restrict
in any manner the ability of Madison or Standard to pay dividends or make
advances to their respective Shareholders or, in turn through intermediary
corporations, to the Borrower.
SECTION 8.2. ACTION IF BANKRUPTCY. If any Event of Default described in
CLAUSES (a) through (d) of SECTION 8.1.9 shall occur, the Commitment (if not
theretofore terminated) shall automatically immediately terminate and the
outstanding principal amount of the Loan and all other Obligations shall
automatically be and become immediately due and payable, without notice or
demand.
SECTION 8.3. ACTION IF OTHER EVENT OF DEFAULT. If any Event of Default
(other than any Event of Default described in CLAUSES (a) through (d) of SECTION
8.1.9) shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Lender shall by notice to the Borrower declare all or any
portion of the outstanding principal amount of the Loan and other Obligations to
be due and payable and/or the Commitment (if not theretofore terminated) to be
terminated, whereupon the full unpaid amount of the Loan and other Obligations
which shall be so declared due and payable shall be and become immediately due
and payable, without further notice, demand or presentment, and/or, as the case
may be, the Commitment shall terminate.
SECTION 8.4. CUMULATIVE REMEDIES. The remedies provided herein are
cumulative and not exclusive of any remedies provided below.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1. WAIVERS, AMENDMENTS, ETC. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Lender. No failure or delay on the part of the Lender
or the holder of any Note in exercising any power or right under this Agreement
or any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No notice
to or demand on the Borrower in any case shall entitle it to any notice or
demand in similar or other circumstances. No waiver or approval by the Lender
or the holder of any Note under this Agreement or any other Loan Document shall,
except as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
F-47
SECTION 9.2. NOTICES. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth below its signature hereto or at such
other address or facsimile number as may be designated by such party in a notice
to the other parties. Any notice, if mailed and properly addressed with postage
prepaid or if properly addressed and sent by pre-paid courier service, shall be
deemed given when received; any notice, if transmitted by facsimile, shall be
deemed given when transmitted (upon receipt of electronic confirmation of
transmission)
SECTION 9.3. PAYMENT OF COSTS AND EXPENSES. The Borrower agrees to pay
on demand all expenses of the Lender (including the reasonable fees and
out-of-pocket expenses of counsel to the Lender and of local counsel, if any,
who may be retained by counsel to the Lender) in connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement, the Note, each Pledge Agreement, the Guarantee and of each other
Loan Document, including schedules and exhibits, and any amendments,
waivers, consents, supplements or other modifications to this Agreement,
the Note, either Pledge Agreement, the Guarantee or any other Loan Document
as may from time to time hereafter be required or requested, whether or not
the transactions contemplated hereby or thereby are consummated;
(b) the filing, recording, refiling or rerecording of any instruments
providing for or relating to collateral security and/or any Uniform
Commercial Code financing statements relating thereto and all amendments,
supplements and modifications to any thereof and any and all other
documents or instruments of further assurance required to be filed or
recorded or refiled or rerecorded by the terms hereof or of the other Loan
Documents;
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement, the Note, either Pledge Agreement,
the Guarantee or any other Loan Document; and
(d) the administration of this Agreement, the Note, each Pledge
Agreement, the Guarantee and the other Loan Documents and the consideration
of legal questions relevant hereto and thereto.
The Borrower further agrees to pay, and to save the Lender harmless from all
liability for, any stamp or other taxes which may be payable in connection
with the execution or delivery of this Agreement, the borrowings hereunder,
or the issuance of the Note, the Guarantee or any other Loan Documents. The
Borrower also agrees to reimburse the Lender upon demand for all reasonable
out-of-pocket expenses (including reasonable attorneys' fees and legal
expenses)
F-48
incurred by the Lender in connection with (x) the negotiation of
any restructuring or "work-out", whether or not consummated, of any
Obligations, and (y) the enforcement of any Obligations.
SECTION 9.4. INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by the Lender and the extension of the Commitment,
the Borrower hereby indemnifies, exonerates and holds the Lender and each of its
officers, directors, employees and agents (collectively, the "INDEMNIFIED
PARTIES") free and harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "INDEMNIFIED
LIABILITIES"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the Loan;
(b) the entering into and performance of this Agreement and any other
Loan Document by any of the Indemnified Parties (including any action
brought by or on behalf of the Borrower as the result of any determination
by the Lender pursuant to Article V not to fund any Loans);
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries of all or any portion of the stock or assets of any Person,
whether or not the Lender is party thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the Release by the Borrower or any of its
Subsidiaries of any Hazardous Material; and
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any Subsidiary thereof of any
Hazardous Material (including any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under any Environmental Law),
regardless of whether caused by, or within the control of, the Borrower or
such Subsidiary,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
gross negligence or wilful misconduct. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
SECTION 9.5. SURVIVAL. The obligations of the Borrower under SECTIONS
4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lender under
SECTION 9.1, shall in each case survive
F-49
any termination of this Agreement, the payment in full of all Obligations and
the termination of all Commitments. The representations and warranties made
by the Borrower in this Agreement and in each other Loan Document shall
survive the execution and delivery of this Agreement and each such other Loan
Document. This Agreement shall not be terminated, even upon payment in full
of the Obligations, until the ZSC Credit Agreement shall have been terminated
and all obligations thereunder paid in full.
SECTION 9.6. SEVERABILITY. Any provision of this Agreement, the Note,
either Pledge Agreement, the Guarantee or any other Loan Document which is
prohibited or unenforceable in any jurisdiction shall, as to such provision
and such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement, the Note, the Pledge Agreement or such Loan Document or affecting
the validity or enforceability of such provision in any other jurisdiction.
SECTION 9.7. HEADINGS. The various headings of this Agreement and of each
other Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.
SECTION 9.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed by
the parties hereto in several counterparts and be deemed to be an original and
all of which shall constitute together but one and the same agreement.
SECTION 9.9. GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTE,
EACH PLEDGE AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
This Agreement, the Note, each Pledge Agreement, the Guarantee and the other
Loan Documents constitute the entire understanding among the parties hereto with
respect to the subject matter hereof and supersede any prior agreements, written
or oral, with respect thereto.
SECTION 9.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that the Borrower may not assign or
transfer its rights or obligations hereunder without the prior written consent
of the Lender.
SECTION 9.11. CONSENT OF BORROWER AS SOLE SHAREHOLDER. The Borrower, as
the sole shareholder of IFSC, hereby expressly and irrevocably consents to the
execution, delivery and performance by IFSC of Pledge Agreement II.
SECTION 9.12. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT,
THE NOTE, EITHER PLEDGE AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
THE LENDER OR
F-50
THE BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE
STATE OF ILLINOIS, XXXX COUNTY, OR IN THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
LENDER'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS, XXXX
COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH SUCH LITIGATION. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF
ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM
THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE
EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE
OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT, THE NOTE, THE PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 9.13. WAIVER OF JURY TRIAL. THE LENDER AND THE BORROWER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTE, EITHER PLEDGE AGREEMENT
OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
aSTATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDER OR THE BORROWER.
THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LENDER ENTERING INTO THIS AGREEMENT AND EACH SUCH LOAN
DOCUMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
INDEPENDENCE CAPITAL CORP.
By
---------------------------------
Title: President
Address: 00 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopier No.: 000-000-0000
Attention: Xxxxxx X. Xxxxx
BANK OF AMERICA ILLINOIS
By
---------------------------------
Title: Senior Vice President
Address: 000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopier No.: 000-000-0000
Attention: Xxxx Xxxx
F-52
SCHEDULE I
DISCLOSURE SCHEDULE
ITEM 6.7 LITIGATION.
None.
ITEM 6.8 EXISTING SUBSIDIARIES.
State of
Incorporation or Ownership Business
Name Organization % Description
---- ---------------- --------- -----------
Independence Financial
Services Corp. Delaware 100% Holding Company
Madison National Life
Insurance Company, Inc. Wisconsin 100% Life and Health
Insurance
Madison Investors
Corporation Delaware 100% Investments
Standard Security Life
Insurance Company of
New York New York 100% Life and Health
Insurance
Standard Security
Investors
Corporation New York 100% Investments
Standard Life Asset
Management Corp. New York 100% Investments
SSH Corp. Delaware 100% Insurance Holding
Company
First Standard
Security
Insurance Company Delaware 100% Property and Casualty
Insurance
On-Line Brokerage,
Inc. Delaware 100% Insurance Agency
F-53
International Benefit
Administrators LLC New York 51% Third Party Administrator
ITEM 6.11 EMPLOYEE BENEFIT PLANS.
None.
ITEM 6.12 ENVIRONMENTAL MATTERS.
None.
F-54
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Use of Defined Terms. . . . . . . . . . . . . . . . . . . 19
SECTION 1.3. Cross-References. . . . . . . . . . . . . . . . . . . . . 19
SECTION 1.4. Accounting and Financial Determinations . . . . . . . . . 19
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTE
SECTION 2.1. Commitments . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.2. Borrowing Procedure . . . . . . . . . . . . . . . . . . . 20
SECTION 2.3. Continuation and Conversion Elections . . . . . . . . . . 20
SECTION 2.4. Funding . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.5. Note. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. . . . . . . . . . . . . . . . 21
SECTION 3.2. Interest Provisions . . . . . . . . . . . . . . . . . . . 22
SECTION 3.2.1. Rates . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.2.2. Default Rates . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.2.3. Payment Dates . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.2.4. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IV
CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS
SECTION 4.1. Eurodollar Rate Lending Unlawful. . . . . . . . . . . . . 24
SECTION 4.2. Deposits Unavailable. . . . . . . . . . . . . . . . . . . 24
SECTION 4.3. Increased Costs, etc. . . . . . . . . . . . . . . . . . . 25
SECTION 4.4. Funding Losses. . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.5. Increased Capital Costs . . . . . . . . . . . . . . . . . 26
F-55
PAGE
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SECTION 4.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.7. Payments, Computations, etc. . . . . . . . . . . . . . . 27
SECTION 4.8. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.9. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V
CONDITIONS TO EFFECTIVENESS AND BORROWING
SECTION 5.1. Effectiveness . . . . . . . . . . . . . . . . . . . . . .28
SECTION 5.1.1. Resolutions, etc.. . . . . . . . . . . . . . . . . . . . 28
SECTION 5.1.2. Delivery of Note . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.1.3. Satisfaction with Tax Sharing Agreements . . . . . . . . 29
SECTION 5.1.4. Opinions of Counsel. . . . . . . . . . . . . . . . . . . 29
SECTION 5.1.5. Closing Fees, Expenses, etc. . . . . . . . . . . . . . . 29
SECTION 5.1.6. Pledge Agreements. . . . . . . . . . . . . . . . . . . . 29
SECTION 5.1.7. Guarantee . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.1.8. Compliance with Warranties, No Default, etc. . . . . . . 30
SECTION 5.1.9. Contribution Agreement . . . . . . . . . . . . . . . . . 31
SECTION 5.1.10. Existing Credit Agreement. . . . . . . . . . . . . . . . 31
SECTION 5.1.11. Satisfactory Legal Form. . . . . . . . . . . . . . . . . 31
SECTION 5.1.12. Borrowing Request. . . . . . . . . . . . . . . . . . . . 31
SECTION 5.1.13. Consents and Amendments. . . . . . . . . . . . . . . . . 31
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. Organization, etc.. . . . . . . . . . . . . . . . . . . . 31
SECTION 6.2. Due Authorization, Non-Contravention, etc.. . . . . . . . 32
SECTION 6.3. Government Approval, Regulation, etc. . . . . . . . . . . 32
SECTION 6.4. Validity, etc.. . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.5. Financial Information . . . . . . . . . . . . . . . . . . 33
SECTION 6.6. Restrictive Agreements. . . . . . . . . . . . . . . . . . 33
SECTION 6.7. Litigation, Labor Controversies, etc. . . . . . . . . . . 33
SECTION 6.8. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.9. Ownership of Properties . . . . . . . . . . . . . . . . . 34
SECTION 6.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 34
F-56
PAGE
----
SECTION 6.11. Pension and Welfare Plans . . . . . . . . . . . . . . . . 34
SECTION 6.12. Environmental Warranties. . . . . . . . . . . . . . . . . 34
SECTION 6.13. Regulations G, U and X. . . . . . . . . . . . . . . . . . 36
SECTION 6.14. Accuracy of Information . . . . . . . . . . . . . . . . . 36
SECTION 6.15. Subordinated Note . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . 37
SECTION 7.1.1. Financial Information, Reports, Notices, etc. . . . . . . 37
SECTION 7.1.2. Compliance with Laws, etc.. . . . . . . . . . . . . . . . 40
SECTION 7.1.3. Maintenance of Properties . . . . . . . . . . . . . . . . 40
SECTION 7.1.4. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.1.5. Books and Records . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.1.6. Environmental Covenant. . . . . . . . . . . . . . . . . . 41
SECTION 7.2. Negative Covenants. . . . . . . . . . . . . . . . . . . . 42
SECTION 7.2.1. Business Activities . . . . . . . . . . . . . . . . . . . 42
SECTION 7.2.2. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.2.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.2.4. Financial Covenants . . . . . . . . . . . . . . . . . . . 44
SECTION 7.2.5. Investments . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.2.6. Restricted Payments, etc. . . . . . . . . . . . . . . . . 46
SECTION 7.2.7. Rental Obligations. . . . . . . . . . . . . . . . . . . . 46
SECTION 7.2.8. Capital Expenditures. . . . . . . . . . . . . . . . . . . 47
SECTION 7.2.9. Take or Pay Contracts . . . . . . . . . . . . . . . . . . 47
SECTION 7.2.10 Consolidation, Merger, etc. . . . . . . . . . . . . . . . 47
SECTION 7.2.11 Asset Dispositions, etc.. . . . . . . . . . . . . . . . . 47
SECTION 7.2.12. Transactions with Affiliates. . . . . . . . . . . . . . . 47
SECTION 7.2.13. Negative Pledges, Upstreaming Money, etc. . . . . . . . . 48
SECTION 7.2.14. Madison and Standard's Ratings . . . . . . . . . . . . . 48
SECTION 7.2.15. Surplus Relief Reinsurance Agreements . . . . . . . . . . 48
SECTION 7.2.16. Management Fees . . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.2.17. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.2.18. Domicile, etc. . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.2.19. Modification of Agreements, Subordinated Note and
Contribution Agreement . . . . . . . . . . . . . . . . . 49
F-57
PAGE
----
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. . . . . . . . . . . . . . . 49
SECTION 8.1.1. Non-Payment of Obligations. . . . . . . . . . . . . . . . 49
SECTION 8.1.2. Breach of Warranty. . . . . . . . . . . . . . . . . . . . 49
SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations . . 49
SECTION 8.1.4. Non-Performance of Other Covenants and Obligations . . . 50
SECTION 8.1.5. Default on Other Indebtedness . . . . . . . . . . . . . . 50
SECTION 8.1.6. Judgments . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.1.7. Pension Plans . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.1.8. Change in Control . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.1.9. Bankruptcy, Insolvency, etc.. . . . . . . . . . . . . . . 51
SECTION 8.1.10 Impairment of Security, etc.. . . . . . . . . . . . . . . 52
SECTION 8.1.11. Licensing; Seizure; etc. . . . . . . . . . . . . . . . . 52
SECTION 8.2. Action if Bankruptcy. . . . . . . . . . . . . . . . . . . 52
SECTION 8.3. Action if Other Event of Default. . . . . . . . . . . . . 52
SECTION 8.4. Cumulative Remedies . . . . . . . . . . . . . . . . . . . 52
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1. Waivers, Amendments, etc. . . . . . . . . . . . . . . . . 53
SECTION 9.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.3. Payment of Costs and Expenses . . . . . . . . . . . . . . 53
SECTION 9.4. Indemnification . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.5. Survival. . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.6. Severability. . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.7. Headings. . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.8. Execution in Counterparts . . . . . . . . . . . . . . . . 56
SECTION 9.9. Governing Law; Entire Agreement . . . . . . . . . . . . . 56
SECTION 9.10. Successors and Assigns. . . . . . . . . . . . . . . . . . 56
SECTION 9.11. Consent of Borrower as Sole Shareholder . . . . . . . . . 56
SECTION 9.12. Forum Selection and Consent to Jurisdiction . . . . . . . 56
SECTION 9.13. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . 57
F-58
PAGE
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SCHEDULE I - Disclosure Schedule
EXHIBIT A - Form of Term Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Pledge Agreement I
EXHIBIT E - Form of Pledge Agreement II
EXHIBIT F - Form of Opinion of Counsel to the Borrower
EXHIBIT G - Form of Guarantee and Contingent Purchase Agreement of the
Borrower
EXHIBIT H Form of Contribution Agreement
EXHIBIT I - Form of Consent and Amendment of Subordinated Note
EXHIBIT J - Form of Consent and Amendment of Tax Allocation Agreement
1525104
F-59